Reserve Bank of India (Non-Banking Financial Companies – Undertaking of Financial Services) Directions, 2025 (Updated as on July 01, 2026)
UR
- Applies toFinance companies
- StatusIn force
- RBI text changedRBI updated this document on October 05, 2026. BankPulse is re-reading it. BankPulse checked all 41 points on this page against RBI's new text on 18 October 2026. Every quoted line is still in RBI's text.
- IssuedNov 28, 2025
- Last amendedJun 15, 2026 · 3 incorporated
- Length41 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNov 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Can be read two ways
A point marked this way sits on an RBI paragraph that can honestly be read two ways. Our own sentence takes one of the two. BankPulse does not choose for you: read RBI’s own paragraph, at the number printed on the point, before you act on it.
Two ways — firm, or the usual course. RBI’s paragraph softens the duty with a hedging word instead of stating it flat. One reading: It is a firm rule, and only a rare case RBI would accept sits outside it. The other: It is the usual course, and a bank may depart from it for its own recorded reasons.
Chapter I. Preliminary
1. Other business for NBFCs
This document sets what other business the lender may take on.
2. In force at once
The rules took effect the day they were issued. There was no grace period.
3. Who is covered
These Directions apply to every non-banking financial company.
Chapter II. General Guidelines
1. Policy must cover funds
The investment policy must carry provisions on investing in such funds.
BankPulse example. A lender that has never invested in such a fund still needs the words in its investment policy. The policy must carry provisions governing its investments in a scheme of that kind. Writing them only when the first investment is proposed is too late.
2. Ten per cent alone
A lender alone cannot put more than ten per cent into an alternative investment fund.
3. Twenty per cent from all
All regulated lenders together cannot hold more than twenty per cent of a fund.
4. Subordinated units deducted
A holding in subordinated units of such a fund is deducted from capital in full.
BankPulse example. A lender puts ₹10 crore into such a fund, as subordinated units. The whole ₹10 crore comes off capital funds. It is taken proportionately from Tier-1 and Tier-2 capital.
5. Some funds are exempt
The Reserve Bank may exempt named funds from these rules by notification.
Chapter III. Financial Services
Do it
1. Read with exchange rules
These rules are read together with the foreign exchange department's guidelines.
2. Approval to go abroad
Opening a subsidiary or joint venture abroad needs the Reserve Bank's prior approval.
3. Conditions on the no objection
A no objection is given only if the general and specific conditions are met.
4. Same rules for other holdings
Overseas holdings that are not subsidiaries follow the same rules as subsidiaries.
5. Investment company needs approval
A core investment company needs approval before a financial venture abroad.
6. Registration needed abroad
A core investment company investing abroad in finance must hold a registration.
7. Thirty days to report
A core investment company must report an overseas non-financial investment within 30 days to its DoS Regional Office.
8. Net worth held after
The minimum net owned funds must still be met after the overseas investment.
9. Bad loans under one
Net bad loans must not exceed one per cent of net advances at the last balance sheet.
10. Three years of profit
The company should have earned a profit continuously for the last three years.
11. Nothing banned by law
Direct investment in activity forbidden by the exchange law is not allowed.
12. Four hundred per cent ceiling
Total overseas investment cannot exceed four hundred per cent of owned funds.
13. Two hundred in finance
Overseas investment in the financial sector cannot exceed two hundred per cent of its owned funds.
14. Only regulated firms abroad
Investment in the financial sector abroad must be in a regulated entity.
15. At most two tiers
Where a holding company is needed abroad, the structure cannot exceed two tiers.
16. Certificate by 30 April
The yearly certificate as at end March is due by 30 April.
17. Automatic route limits activity
A company taking foreign investment by the automatic route may do only permitted work.
18. Insurance entry through Pravaah
Entry into insurance business is applied for through the Pravaah portal.
19. Insurance not done in house
A finance company cannot carry on insurance business departmentally.
20. Higher stake sold down
A higher initial stake may be allowed but must be divested within the set period.
21. Insurance JV: 50% cap
Any other NBFC may hold at most 50 per cent of the insurance joint venture's paid-up capital.
22. Tested on audited accounts
Eligibility is judged on the latest audited balance sheet for the previous year.
23. No forcing an insurer
The company cannot compel a customer towards one insurer on assets it finances.
24. Customer chooses
The customer must be left free to make his own choice.
25. Say it in publicity
All publicity material must state prominently that insurance is voluntary.
26. No link to lending
There must be no link, direct or indirect, between the loan and the insurance.
27. Premium goes direct
The premium is paid by the insured straight to the insurer, not through the lender.
28. Agency risk stays outside
Risk in the insurance agency work must not pass to the lending business.
29. CIC stake: IRDA's approval
A core investment company's stake in an insurance joint venture is capped only by IRDA's approval.
Chapter IV. Repeal and Other Provisions
1. Old rules stay repealed
Rules repealed before this document was issued remain repealed.
2. Past acts still stand
Anything done under the old rules is still judged by the old rules.
3. Old approvals carry over
Approvals given under the repealed rules are now read under these rules.
4. Added to other law
These rules sit on top of every other law and rule already in force.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Dec 05, 2025.
- when rules start. All changes apply from December 05, 2025.
- what it changes. These rules change the 2025 Master Direction on non-banking financial companies financial services.
Changed on Apr 27, 2026.
- New entry in Annex. Annex I now also lists AgriSURE Agri Fund for Start Ups and Rural Enterprises.
- Start date. This amendment starts from the date of this circular.
Changed on Jun 15, 2026.
- start date. These amendment rules apply from January 01, 2027.
- only regulated products. In agency business, the non-banking financial company must sell only regulated financial products or services.
- insurance no rbi nod. A non-banking financial company can do insurance distribution without Reserve Bank of India approval, if it meets given conditions.
- irDAI approval needed. For insurance distribution, the non-banking financial company must get needed Insurance Regulatory and Development Authority of India permission.
The same subject for other kinds of institution
The same subject for other kinds of institution.
RBI financial services business rules for all India financial institutions
RBI financial services business rules for regional rural banks
RBI financial services business rules for rural co-operative banks
RBI financial services business rules for small finance banks
RBI financial services business rules for urban co-operative banks
Other RBI rules for NBFCs
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