Reserve Bank of India (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025
UR
- Applies toFinance companies
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Amendmentsnone tracked
- Length14 points in 3 sections · 2 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
This rulebook is short, and the page is short with it. The whole direction is about 1,250 words long; these points cover every operative rule in it.
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What it says
Chapter I. Preliminary
1. In force at once
These Directions came into force with immediate effect.
2. Who is covered
These Directions apply to every finance company. All layers of RBI's framework are covered.
3. Three kinds of merger
The rules cover a merger of two finance companies. They also cover a merger with any entity outside RBI's watch.
Chapter II. Grant of No Objection Certificate (NOC) / Approval by RBI
Must know
1. A quarter of the equity
Prior approval is needed if shareholding moves by 26 per cent or more of the paid up equity.
2. A third of the board
RBI must approve first if more than 30 per cent of the directors change. Independent directors do not count.
BankPulse example. A finance company has 10 directors, of whom 2 are independent. The other 8 are counted. Replacing 3 of those 8 is more than 30 percent, so RBI must approve first.
Do it
3. RBI's paper first
The company must hold RBI's no objection or approval first. Only then may it go to a court or tribunal.
4. Both sides seek it
When two finance companies merge, both must seek RBI's no-objection certificate.
5. Control change needs approval
RBI must approve first if the merger changes control. Control here is what the SEBI takeover rules mean by it.
6. Merging inward
An outside entity may merge into a finance company. The finance company must first hold RBI's no objection.
7. The business test continues
The merged finance company must still pass the principal business test. That is how it keeps its registration.
Background
8. The tribunal approves
Every such merger goes through the company law tribunal. The tribunal approves it under the Companies Act.
9. One registration dies
After the merger, the absorbed company hands back its registration certificate. RBI then cancels it.
10. Merging outward
A finance company merging into an outside entity needs RBI approval first. It then hands back its registration.
11. The survivor may register
The surviving outside entity may seek its own registration. It approaches RBI if it would pass the principal business test.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for NBFCs
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