MUMBAI, Oct. 22 (Xinhua) -- India's central bank on Friday introduced a scale-based regulatory framework for parallel lending companies in the country, which is effective from Oct. 1 next year.

The framework encompasses different facets of regulation for the parallel lenders, popularly called non-banking finance companies (NBFC), that will cover capital requirements, governance standards, prudential regulation, among others.

Speaking at an industry body conclave on NBFC earlier in the day, Deputy Governor of the Reserve Bank of India (RBI) M. Rajeshwar Rao said, "The reputation of the non-banking financial sector has been dented in recent times by failure of certain entities due to idiosyncratic factors."

"The challenge, therefore, is to restore trust in the sector by ensuring that a few entities or activities do not generate vulnerabilities which go undetected and create shocks and give rise to systemic risk through their interlinkages with the financial system," Rao noted.

As per the new norms, the NBFCs in the lowest layer will be known as NBFC-Base Layer, while those in the middle and upper layers will be known as NBFC-Middle Layer and NBFC-Upper Layer, respectively.

Under the new framework, the RBI has tweaked the non-performing asset (NPA) classification to more than 90 days for all categories of the NBFCs.

According to the RBI, the country's central bank, there are 9,651 NBFCs across 12 different categories focused on a diverse set of products, customer segments, and geographies.

As of March 31 this year, the NBFC sector has assets worth more than 721 billion U.S. dollars, equivalent to about 25 percent of the asset size of the banking sector in Asia's third-largest economy. Enditem

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