RBI Eases Reorganisation Rules for Bank Groups in New Financial Services Framework

RBI’s Final Financial Services Guidelines Offer Flexibility While Tightening Compliance Norms

The Reserve Bank of India has released its final framework on financial services undertaken by commercial banks, easing restructuring requirements that had raised concerns across major banking groups. The revised guidelines—part of the Commercial Banks – Undertaking of Financial Services, 2025 framework—strike a balance between operational flexibility and enhanced regulatory discipline.

Overlapping Lending Permitted With Governance Oversight

One of the most significant relaxations is the continuation of overlapping lending activities within bank groups, provided boards approve the arrangements. This prevents forced restructuring for nearly a dozen multi-entity banking groups that operate across NBFCs, HFCs and other lending arms. The move allows entities to retain differentiated customer strategies without violating prudential norms.

Regulatory Alignment Across Group Entities

Despite easing restructuring expectations, the RBI retained several critical restrictions from its 2024 draft. NBFCs within bank groups are now subject to upper-layer scale-based regulations, and bank-level lending restrictions—such as exposure limits—will apply to these NBFCs as well. The regulator also preserved the 20% cap on group shareholding in asset reconstruction companies to reduce concentration risks.

Crisil: Final Rules Reduce Operational Disruption

According to Crisil Ratings, the original 2024 draft would have required reorganising around 55% of sectoral advances, affecting 2–6% of consolidated bank portfolios. The final rules significantly reduce restructuring pressures while reinforcing compliance through standardised norms for group lending entities.

Exam Oriented Facts

• Final guidelines: Commercial Banks – Undertaking of Financial Services, 2025 .

• Overlapping lending allowed with board approval .

• 20% shareholding ceiling in ARCs retained.

• Upper-layer NBFC norms deadline: March 31, 2028 .