The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025, set out rules for prior approval, fit-and-proper criteria, and reporting requirements for acquiring major shareholding in local area banks.
•It mandates continuous monitoring by banks of major shareholders’ compliance, due diligence, and disclosures to ensure integrity, financial soundness, and adherence to Section 12B of the Banking Regulation Act.
•Shareholding limits, lock-in periods, and voting rights ceilings are specified, with special restrictions for investors from FATF non-compliant jurisdictions.
•The Directions repeal previous guidelines but preserve past actions, while RBI retains final authority for interpretation, approvals, and enforcement.
•These directions shall become effective on November 28, 2025.
[Notification No.: RBI/DOR/2025-26/222 DOR.HOL.REC.141/16.13.100/2025-26]
