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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Non-Operative Financial Holding Company) Directions, 2025

28-Nov-2025 | RBI/DoR/2025-26/372 DoR.LIC.REC.No.291/16.13.218/2025-26

RBI has issued Reserve Bank of India (Non-Operative Financial Holding Company) Directions, 2025 effective from 28th November 2025. Key Highlights: 1. Applicability - Applicable to all Non-Operative Financial Holding Companies (NOFHCs). 2. Registration Requirement - An NOFHC must be registered with RBI as an NBFC and can apply only after receiving in-principle approval to set up a bank. Applications are submitted through the PRAVAAH portal. 3. Regulatory Structure & Promoter Shareholding - NOFHCs are always classified under the Base Layer of NBFC regulations, and the Promoter/Promoter Group must hold at least 51% of its equity. 4. Shareholding Rules - Only individuals, non-financial entities, and CICs in the promoter group may hold shares in the NOFHC. No non-promoter can hold more than 10%, and no non-promoter may gain significant influence or control. 5. Prudential Norms - NOFHCs must follow RBI norms on investments, income recognition, provisioning, liquidity (SLS/IRS statements), leverage limits (max 1.25x of equity + reserves), and must transfer at least 25% of profits to a reserve fund yearly. 6. Exposure Restrictions - NOFHCs cannot lend or invest in promoter group entities except those directly under it. They also cannot have exposure to entities outside the group except within permitted liquidity management limits. Similar strict exposure limits apply to the bank and other financial subsidiaries. 7. Consolidated Supervision - RBI must be able to supervise the entire NOFHC group on a consolidated basis. Individual entities under the NOFHC will also be supervised by their respective sectoral regulators. For more information, please refer to the attached document.

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