The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks - Voluntary Amalgamation) Directions 2025.
The following has been stated: -
•The RBI (Local Area Banks: Voluntary Amalgamation) Directions, 2025 govern the merger of two Local Area Banks (LABs) or an LAB with an NBFC, effective immediately.
•Amalgamation requires approval by a two-thirds majority of the total Board members of both entities, considering due diligence, swap ratio fairness, and compliance with shareholding norms.
•The scheme must also be approved by a resolution passed by shareholders representing a two-thirds value of those present, and dissenting shareholders have a right to claim the value of their shares as determined by the RBI.
•Final approval/sanction must be obtained from the RBI, with submissions via the PRAVAAH portal, and in the case of an NBFC merger, a No-Objection Certificate from the RBI is required before approaching the Tribunal.
These directions shall become effective on November 28, 2025.
[Notification No.: RBI/DOR/2025-26/223 DoR.HOL.REC.No.142/16-13-100/2025-26]
