RBI Issues 2025 Directions for NBFCs to Strengthen Group Entity Compliance for Banks

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  • Last Updated on 8 December, 2025

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RBI 2025 Directions for NBFCs

Notification No. RBI/DOR/202526/138DOR.RAUG.AUT.REC.No.343/24.01.041/2025-26; dated: 05.12.2025

1. Regulatory Background

The Reserve Bank of India (RBI) has released the 2025 Directions on “NBFCs – Undertaking of Financial Services”, replacing the earlier RBI (NBFC–Undertaking of Financial Services) Master Directions, 2025, which were issued on November 28, 2025. The revised framework is part of RBI’s broader harmonisation exercise aimed at strengthening prudential supervision, governance, and group-level risk management.

2. Effective Date

The new Directions will come into force from December 5, 2025. All entities falling within the scope of this framework must comply with updated norms from this date onward.

3. Applicability

The 2025 Directions shall apply to:

  • Non-Banking Financial Companies (NBFCs)
  • Housing Finance Companies (HFCs) governed under RBI supervision
  • Any NBFC that is a group entity of a Scheduled Commercial Bank

Such NBFCs must ensure compliance with all relevant prudential, operational, and governance provisions prescribed under the updated Directions, without exception.

4. Key Regulatory Focus

The revised Directions aim to:

  • Strengthen group-level supervision and risk containment
  • Ensure that NBFCs owned or controlled by Scheduled Commercial Banks do not undertake unregulated or non-core financial service activities without adequate oversight
  • Improve capital discipline, exposure management, and governance clarity across financial conglomerates
  • Provide a uniform regulatory perimeter for entities operating within banking-led financial groups

5. Compliance Considerations

NBFCs falling under a banking group must:

  • Review their business models, structures, and exposures to ensure alignment with the new Directions
  • Strengthen internal risk management frameworks, governance standards, and reporting systems
  • Ensure clear operational segregation between core bank activities and NBFC-related business
  • Align group-wide compliance manuals, SOPs, exposure policies, and disclosures with updated requirements

Non-compliance may attract enhanced supervisory scrutiny, restrictions on business operations, or corrective regulatory measures.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied