The Reserve Bank of India issued amendments to its Non-Operative Financial Holding Company (NOFHC) Master Direction, setting a clearer framework for how banking groups should organise business lines and when NOFHC-held entities need prior RBI approval to undertake new activities. The amendments take effect from December 05, 2025. Under the revised approach, activities permitted to a bank under Section 6(1)(a) to (o) of the Banking Regulation Act, 1949 are to be carried out from the bank itself, while specialised activities such as mutual fund, insurance and pension fund management, investment advisory and management, portfolio management and broking are to be conducted only through a subsidiary, joint venture or associate. NOFHCs will not need prior RBI approval for entities to undertake these specialised activities unless advised otherwise, but must notify the RBI within 15 days of the board resolution; prior RBI approval remains required for entities to undertake any other form of business, and activities not permitted to the bank are also not permitted to group entities.
Reserve Bank of India 2025-12-05
Reserve Bank of India amends NOFHC directions to require most permitted activities to be housed in the bank and to streamline approvals for specialised financial services
The Reserve Bank of India amended its Non-Operative Financial Holding Company Master Direction, clarifying banking group organization and requiring prior RBI approval for new activities. Banks must conduct activities under Section 6(1)(a) to (o) of the Banking Regulation Act, 1949 directly, while specialized activities like mutual fund and insurance management must be through subsidiaries or joint ventures. NOFHCs must notify the RBI within 15 days of board resolutions for specialized activities, but prior approval is required for other business forms.