Reserve Bank of India (All India Financial Institutions – Undertaking of Financial Services) Directions, 2025 (Updated as on April 27, 2026)

1. Other business

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 all India financial institution.

4. What financial services means

Financial services here include the businesses named in each institution's own Act.

1. Read with exposure rules

These instructions are read together with the prudential rules on exposures.

2. Approval before investing

No investment in a subsidiary or financial services company without prior approval.

3. No Category III funds

An institution cannot invest in a Category III alternative investment fund.

4. Subsidiary limited there too

A subsidiary's holding in such a fund is limited to the market regulator's minimum.

5. 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.

6. Ten per cent alone

A lender alone cannot put more than ten per cent into an alternative investment fund.

7. Twenty per cent from all

All regulated lenders together cannot hold more than twenty per cent of a fund.

8. 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.

9. Some funds are exempt

The Reserve Bank may exempt named funds from these rules by notification.

10. Apply through Pravaah

An application needing the Reserve Bank's approval goes through the Pravaah portal.

1. Inspect the subsidiary

The parent must inspect or audit its subsidiaries' books from time to time.

2. No grandchild company

A subsidiary cannot set up another company or start new business without approval.

3. What new business means

Growing in a line already permitted does not count as new business.

4. No control by stealth

A subsidiary cannot buy into a company to take control without prior approval.

5. No account access

A subsidiary cannot have online access to customers' accounts at the institution.

6. Sharing at arm's length

Information may pass between the two only on an arm's length footing.

7. No unsecured loan

No unsecured advance may be given to the subsidiary without prior approval.

8. Deals at arm's length

Every transaction between the institution and its subsidiary is at arm's length.

9. No favours to the subsidiary

A subsidiary gets no better treatment than any other party of the same risk.

10. Foreign products carry norms

Products sold by foreign branches carry the capital and exposure norms too.

11. Stricter rule abroad

An overseas branch follows whichever rule is stricter, the host's or India's.

12. Ask when unclear

Where the Indian rules say nothing about a product, guidance must be sought.

13. Indian law follows abroad

Work of foreign branches stays subject to Indian law unless the law exempts it.

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.