By Bl Mumbai Bureau

Copyright thehindubusinessline

Large banks with subsidiaries in the same line of business will heave a sigh of relief as the RBI said the proposed bar on overlap in the businesses undertaken by a bank and its group entity is being removed.

As per the RBI’s Draft Circular – Forms of Business and Prudential Regulation for Investments, which was issued in October 2024, only a single entity within a bank group (the bank and its group entities) can undertake a particular form of permissible business.

Further, multiple entities within a bank group should not undertake the same business or hold/ acquire the same category of license/ authorisation or registration from any financial sector regulator.

Moreover, there shall be no overlap in the lending activities undertaken by the bank and its group entities.

With the RBI seeking to remove the bar on business overlap, entities such as ICICI Bank (wholly owned subsidiary ICICI Home Finance undertakes home loans) and HDFC Bank (subsidiary HDB Financial Services), and Axis Bank (wholly owned subsidiary Axis Finance) may continue to retain their shareholding in their subsidiaries.

RBI Governor Sanjay Malhotra said the draft guidelines on forms of business and investment for banks, issued in October 2024, have been finalised and will be issued shortly.

“Based on feedback and review, the proposed bar on overlap in the businesses undertaken by a bank and its group entity is being removed. The circular aims to streamline the activities undertaken by banks and their group entities while providing more operational freedom to banks and NOFHCs (Non-Operative Financial Holding Companies) for equity investments and setting up group entities, respectively,” he said.

Published on October 1, 2025