The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) Directions, 2025, consolidating the regulatory framework that governs the forms of financial services commercial banks may undertake. These Directions define key terms (financial services company, subsidiary, associate, equity instrument, factoring, leasing, investment advisory, PMS, insurance, pension fund management, etc.), specify applicability to all commercial banks except SFBs, PBs and LABs, and clarify commencement timelines (with certain provisions effective January 1, 2026).
This outlines the responsibilities of bank boards, requiring board-approved policies for entry into financial services, oversight of subsidiaries, governance of investments, and internal controls. The Directions prescribe prudential rules for investments in financial and non-financial services companies, including exposure limits, capital adequacy considerations, internal assessments, and conditions for promoting or acquiring subsidiaries or associates. They also specify procedures for approvals, relations between banks and subsidiaries, arm’s-length requirements, and consolidated supervision norms.
The RBI details permissible financial services—factoring, leasing, underwriting, primary dealership, broking, mutual fund and insurance distribution, pension fund management, advisory and PMS, agency/referral services, government securities retailing, commodity derivatives broking, bullion exchange participation, and operations in foreign jurisdictions/IFSCs—along with activity-specific conditions. The Directions also provide repeal, savings and interpretive provisions, ensuring alignment with BR Act, RBI Act, SEBI statutes and other sectoral regulations.
[Notification No. RBI/DOR/2025-26/148]
