Reserve Bank of India (Universal Banks – Licensing) Guidelines, 2025
UR
- Applies toCompanies and groups seeking a universal bank licence
- StatusIn force
- IssuedNovember 28, 2025
- Amendmentsnone tracked
- Length29 points in 4 sections · 3 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- 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.
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Numbers to remember
| 10 years | Individuals with 10 years of senior banking experience can promote a new bank. RBI Para 6 |
| ₹1,000 crore | A new universal bank needs at least ₹1,000 crore in paid-up capital. RBI Para 14(1) |
| 13 per cent | A new universal bank must hold 13 per cent capital adequacy for at least its first three years. RBI Para 14(3) |
| six years | A new bank must list its shares within six years of starting business. RBI Para 14(4) |
| five years | That 40% promoter stake must stay locked in for five years. RBI Para 15(1) |
| 15 years | Promoter ownership must fall to 26% within 15 years of the bank's launch. RBI Para 15(4) |
| 18 months | Promoters must meet every condition within 18 months of approval. RBI Para 39 |
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.
Must know
1. Who can promote
Individuals with 10 years of senior banking experience can promote a new bank.
2. Shell banks barred
A shell bank cannot promote or set up a new bank in India.
3. ₹1,000 crore capital floor
A new universal bank needs at least ₹1,000 crore in paid-up capital.
BankPulse example. A group applies to open a new universal bank. The minimum paid-up voting equity capital is Rs 1,000 crore. An application built on Rs 700 crore cannot proceed.
4. One thousand crore floor
The bank must hold a minimum net worth of ₹1,000 crore at all times.
5. 13 percent capital adequacy
A new universal bank must hold 13 per cent capital adequacy for at least its first three years.
6. Six-year listing deadline
A new bank must list its shares within six years of starting business.
7. 40 percent promoter stake
Bank promoters must hold at least 40% of the bank's shares.
8. Five-year lock-in
That 40% promoter stake must stay locked in for five years.
9. Dilution to 26 percent
Promoter ownership must fall to 26% within 15 years of the bank's launch.
10. Dilution schedule at licensing
The promoter must submit a dilution schedule for Reserve Bank examination when the licence is issued.
11. No board seat here
Such shareholders cannot have a director on the board under shareholder agreements or otherwise.
12. 5 percent approval rule
Buying 5% or more of a bank's shares needs RBI's prior approval.
13. 25 percent rural branches
New banks must open at least 25% of branches in unbanked rural areas.
14. 18-month compliance window
Promoters must meet every condition within 18 months of approval.
15. Five years as SFB
It must operate as an SFB for five years before converting.
16. SFB conversion threshold
A small finance bank needs ₹1,000 crore net worth to become a universal bank.
17. No new promoters allowed
A small finance bank moving to universal bank cannot add or change promoters.
Do it
1. Small finance bank route
A small finance bank wishing to become a universal bank must follow Chapter II.
2. NOFHC keeps Basel capital
The holding company must keep capital adequacy on a consolidated basis under applicable Basel norms.
3. Independent board majority
Most of the bank's board must be independent directors.
4. Arm's length with promoters
The bank must keep an arm's length relationship with promoter group entities and their main suppliers.
5. Priority lending targets
New banks must meet the same priority-sector lending targets as existing banks.
6. Apply through PRAVAAH
Applications must be submitted through PRAVAAH in the prescribed Form III.
7. Bad loan thresholds
Its bad loans must stay under 3% gross and 1% net to qualify.
8. Give the transition reason
An eligible small finance bank must give a detailed rationale for the transition.
Background
1. NBFC conversion route
NBFCs controlled by residents with a 10-year track record can convert into a bank.
2. Group entities need NOFHC
Where promoters hold other group entities, the bank may be set up only through a NOFHC.
3. Complaints cell
Every new bank needs a high-powered cell for customer complaints.
4. Dilution plan unchanged
The promoter shareholding dilution plan already approved by the Reserve Bank does not change.
The same subject for other kinds of institution
The same subject for other kinds of institution.