The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025 to ensure that ownership and control of banking companies remain well-diversified and that major shareholders remain ‘fit and proper’ on a continuous basis. These Directions apply to all commercial banks except SFBs, PBs, LABs and foreign banks, and define key terms such as acquisition, aggregate holding, major shareholding, encumbrance, relative, and significant beneficial owner. These directions shall become effective on the day these are placed on the official
website of the Reserve Bank. This prescribes mandatory prior approval for acquiring 5% or more of shares or voting rights in a banking company, along with detailed ‘fit and proper’ criteria covering integrity, financial soundness, track record, regulatory compliance, and source of funds. It lays down the procedure for seeking approval (Forms A1/A2), documentation requirements, timelines, and conditions for granting approval, including restrictions on encumbrances and obligations for ongoing compliance.
It introduced strong continuous-monitoring requirements through due-diligence systems, mechanisms to detect breaches of Section 12B(1) of the BR Act, periodic reporting obligations, limits on shareholding, lock-in rules, and ceilings on voting rights. The Directions also include repeal and saving clauses, clarify the application of other laws, and set interpretational guidance.
[Notification No. RBI/DOR/2025-26/145]
