Notification No. RBI/DOR/2025-26/135DOR.RAUG.AUT.REC.No.342/24.01.041/2025-26, Dated: 05.12.2025
1. Regulatory Background
The Reserve Bank of India (RBI) has issued the 2025 Directions to amend the earlier Commercial Banks – Undertaking of Financial Services Directions notified on November 28, 2025. These amendments fine-tune the supervisory expectations for commercial banks and their group structures, particularly in relation to non-banking business entities.
2. Applicability
The amended Directions now extend regulatory coverage to all NBFCs, including:
- Non-Banking Financial Companies (NBFCs)
- Housing Finance Companies (HFCs)
- Other group entities of commercial banks operating in India
This ensures a uniform prudential discipline across financial groups where banks have ownership, control, or strategic exposure.
3. Effective Date
The amended Directions are effective from December 05, 2025.
Commercial banks and their financial group structures must align their internal compliance framework, reporting standards, capital exposure rules, and governance norms with the revised regulatory expectations from this date.
4. Regulatory Intent and Significance
The amendments aim to:
- Enhance group-level prudential supervision
- Create a harmonised regulatory perimeter for entities under a banking group
- Reduce risks arising from non-core or non-bank financial activities undertaken within the group
- Strengthen governance, ring-fencing, and capital protection mechanisms
The RBI’s updated framework reflects a consolidated supervisory approach, ensuring that financial groups led by banks do not create regulatory blind spots through subsidiaries, associates, or non-banking entities.
5. Compliance Considerations
Commercial banks should:
- Review ownership and exposure structures relating to NBFCs and HFCs within the group
- Ensure clear segregation between banking operations and risk-bearing non-core financial activities
- Update internal risk management, monitoring, and governance systems
- Align group-wide reporting and disclosures with revised RBI standards
Failure to comply may invite group-level corrective actions, tighter supervisory scrutiny, or restrictions on business expansion.
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