Payments Banks Voluntary Amalgamation Directions

RBI/DoR/2025-26/206 DoR.HOL.REC.No.125/16-13-100/2025-26 November 28, 2025

Reserve Bank of India (Payments Banks – Voluntary Amalgamation) Directions, 2025

Table of Contents

• Chapter I – Preliminary
  • A. Short Title and Commencement
  • B. Applicability
  • C. Definitions
  • D. Scope
• Chapter II – Approval by Board of Directors and Shareholders
  • A. Approval by Board of Directors
  • B. Approval by Shareholders
• Chapter III – Approval or sanction by RBI
• Chapter IV – Entitlement of dissenting shareholders
• Chapter V – Norms for buying / selling of shares by promoters
• Chapter VI- Repeal and Other Provisions
  • A. Repeal and saving
  • B. Application of other laws not barred
  • C. Interpretations
• Annex

In exercise of the powers conferred by Section 44A and Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest to do so, hereby issues the Directions hereinafter specified.

Chapter I - Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Payments Banks – Voluntary Amalgamation) Directions, 2025.

2. These Directions shall come into force with immediate effect.

B. Applicability

3. These Directions shall be applicable to Payments Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank').

C. Definitions

4. In these directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below:

‘Amalgamated Entity’ means the entity which is proposed to transfer its business to another entity under the scheme of amalgamation.

‘Amalgamating Entity’ means the entity which is to acquire the business of the amalgamated entity under the scheme of amalgamation.

‘Amalgamation’ refers to one or more entities merging with another entity under the relevant statutes / regulations through a scheme of amalgamation (or whatever name called), which sets out the terms and modalities of the process.

‘Tribunal’ means the National Company Law Tribunal constituted under Section 408 of the Companies Act, 2013 (as defined in sub-section (90) of Section 2 of the said Act), as amended from time to time.

5. All other expressions, unless defined herein, shall have the same meaning as have been assigned to them under the Reserve Bank of India Act, 1934, or the Banking Regulation Act, 1949, or any statutory modification or re-enactment thereto, or Glossary of Terms published by the RBI, or as used in commercial parlance, as the case may be.

D. Scope

6. The undernoted cases of amalgamation shall be covered under these Directions:

• Two banks
• A bank with a banking company (as defined under clause (c) of Section 5 of Banking Regulation Act, 1949) excluding foreign banks or vice-versa.
• A Non-Banking Financial Company (NBFC) with a bank or vice versa.

Chapter II – Approval by Board of Directors and Shareholders

A. Approval by Board of Directors

7. The decision of amalgamation shall be approved by two-third majority of the total number of Board members (not merely of those present and voting) of both the amalgamating and the amalgamated banks.

Provided that, it shall be ensured that ‘Deeds of Covenants’, as indicated in Reserve Bank of India (Payments Banks - Governance) Directions, 2025, have been obtained from all independent and non-executive directors participating in the said meetings.

8. While giving approval, the Boards of the banks concerned shall give particular consideration to the following matters:

• Whether due diligence exercise has been undertaken in respect of the amalgamated entity.
• The changes which are proposed to be made in the composition of the Board of Directors of the amalgamating entity, consequent upon amalgamation, and the resultant composition of the Board are in conformity with the Reserve Bank guidelines / directives in this regard.
• The nature of the consideration that the amalgamating entity will pay to the shareholders of the amalgamated entity.
• Whether the swap ratio has been determined by independent valuers having required competence and experience and whether, in the opinion of the Board, such swap ratio is fair and proper.
• The shareholding pattern in the concerned entities and whether, as a result of the amalgamation and the swap ratio, the shareholding of any person, entity or group in the amalgamating entity will be in contravention of RBI guidelines or any other applicable statute, or regulatory instruction, requiring prior approval from RBI or any other regulatory or administrative authority.
• The values at which the assets, liabilities and reserves of the amalgamated entity are proposed to be incorporated into the books of the amalgamating entity and whether such incorporation will result in a revaluation of assets upwards, or credit being taken for unrealised gains.
• The impact of amalgamation on the profitability and capital adequacy ratio of the amalgamating entity.

9. In case of amalgamation of an NBFC with a bank or vice versa, the Board of the payments bank shall, in addition to the requirement stipulated in paragraph 8, also examine whether:

• The NBFC has violated or is likely to violate any of the RBI / SEBI norms and if so, the Board shall ensure that these norms are complied with before the scheme of amalgamation is approved.
• The NBFC has complied with the ‘Know Your Customer’ norms for all the accounts.
• If the NBFC has availed of credit facilities from a bank / Financial Institution (FI), whether the loan agreements mandate the NBFC to seek consent of the bank / FI concerned for the proposed merger / amalgamation.

B. Approval by Shareholders

10. The draft scheme of amalgamation, having been approved separately by the Boards of Directors of each of the entities under amalgamation, in accordance with paragraph 7 to paragraph 9, as applicable, shall be approved by the shareholders of the banks undergoing amalgamation by a resolution passed by a majority in number, representing two-thirds in value of the shareholders of the said bank, present in person or by proxy at a meeting called for the purpose.

Provided that the ceiling on voting rights under Section 12(2) of the Banking Regulation Act, 1949, shall apply when there is a poll to determine whether the resolution has been passed by required majority.

11. The notices of every meeting of the shareholders called for approving the draft scheme of amalgamation shall be published in newspapers at least once a week for three consecutive weeks in not less than two newspapers circulating in the locality or localities where the registered offices of the banks are situated, and one of the newspapers shall be in a language commonly understood in the locality or localities.

Chapter III – Approval or sanction by RBI

12. Subsequent to the scheme of amalgamation being approved by the requisite majority of shareholders as specified under paragraph 10 of these Directions, it shall be submitted to RBI for approval or sanction, as applicable.

Provided that for voluntary amalgamation of an NBFC with a bank or vice versa, scheme of amalgamation shall require approval by the Tribunal in terms of Sections 230 to 234 of the Companies Act, 2013. However, No-Objection Certificate’ from RBI shall be obtained before approaching any Court or Tribunal for approval of amalgamation of a bank and an NBFC.

13. For this purpose, information and documents shall be submitted to RBI through the PRAVAAH portal (https://pravaah.rbi.org.in) as under:

• Amalgamation of two banks: The amalgamating and amalgamated banks shall submit the information and documents in accordance with the requirements specified in Annex.
• Amalgamation of an NBFC with a bank or vice versa: The bank shall submit the information and documents in accordance with Annex, excluding item 4.