Reserve Bank of India (Universal Banks – Licensing) Guidelines, 2025

RBI/DOR/2025-26/143 November 28, 2025

Reserve Bank of India (Universal Banks- Licensing) Guidelines, 2025

Table of Contents

Chapter I: ‘On tap’ Licensing of Universal Banks in the Private Sector

• A. Preamble
• B. Definitions
• C. Guidelines
  • C.1 Eligible Promoters
  • C.2 ‘Fit and Proper’ criteria
  • C.3 Corporate structure
  • C.4 Minimum voting equity capital requirements and pattern of shareholding in the bank
  • C.5 Regulatory framework
  • C.6 Foreign shareholding in the bank
  • C.7 Corporate Governance, Prudential and Exposure norms
  • C.8 Business Plan for the bank
  • C.9 Other conditions for the bank
  • C.10 Additional conditions for NBFCs promoting / converting into a bank
• D. Procedure for application
• E. Procedure for RBI decisions

Chapter II: Voluntary transition of Small Finance Banks to Universal Banks

• A. Background:
• B. Provisions

Annex I

• A. Additional information to be furnished by the Promoters along with relevant supporting documents
  • A.1 Existing Structure
  • A.2 Proposed Structure
  • A.3 Project Report
  • A.4 Any other information

Appendix I

• Self-declaration from the main individual promoter of the promoter group
• Undertaking
• Form I
• Form II
• Form III
• Form IV
• Form V
• Form VI
• Form VII
• Form VIII
• Form IX

Appendix II

Appendix III

• Form X
• Form XI

Chapter I: ‘On tap’ Licensing of Universal Banks in the Private Sector

A. Preamble

The Reserve Bank of India (RBI) had issued guidelines for licensing of new banks in the private sector on February 22, 2013. Reserve Bank issued in-principle approval to two applicants and they have since established the banks as per the licences.

Subsequently, recognising the need for an explicit policy on banking structure in India in line with the recommendations of the Narasimhan Committee, the Raghuram G. Rajan Committee, and other viewpoints, the Reserve Bank released a policy discussion paper on Banking Structure in India – The Way Forward on August 27, 2013. The discussion paper advocated reviewing the prevailing ‘Stop and Go’ licensing policy and shift towards a policy of ‘continuous authorisation’ noting that such a framework would increase the level of competition and bring new ideas in the system. The feedback on the discussion paper broadly endorsed the proposal of continuous authorization, subject to adequate safeguards. Further, the first Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014, inter alia, indicated that after issuing in-principle approval for new licences, the Reserve Bank would work on the framework for ‘on tap’ licensing as well as differentiated bank licences, building on the Discussion Paper and the learning from the recent licensing process.

Based on the experience of licensing two universal banks in 2014 and that of granting in-principle approvals for Small Finance Banks and Payments Banks, the Reserve Bank released the ‘Draft Guidelines for ‘on tap’ Licensing of Universal Banks in the Private Sector’ on May 5, 2016 for comments. After carefully examining the comments/ suggestions received, RBI finalised and released the new framework on August 01, 2016, for granting licences for universal banks on a continuous basis. These guidelines have been updated with revised instructions in this area.

B. Definitions

1. ‘Promoter’ means, the person who together with his relatives [as defined in Section 2 (77) of the Companies Act, 2013 and Rules made there under], by virtue of his ownership of voting equity shares, will be/ is in effective control of the bank / NOFHC, and includes, wherever applicable, all entities which form part of the Promoter Group.

Explanation: The term ‘effective control’ means any arrangement whether in the form of shareholding or agreement or otherwise, which enables exercise of control.

2. ‘Promoting entity’ means the entity that promotes the bank.

3. ‘Promoter Group’ includes:

• A. the promoter;
• B. relatives of the promoter [as defined in Section 2 (77) of the Companies Act, 2013 and Rules made there under]; and
• C. in case promoter is a body corporate:
  • a subsidiary or holding company of such body corporate;
  • any body corporate in which the promoter holds ten per cent or more of the equity share capital or which holds ten per cent or more of the equity share capital of the promoter;
  • any body corporate in which a group of individuals or companies or combinations thereof which hold twenty per cent or more of the equity share capital in that body corporate also holds twenty per cent or more of the equity share capital of the promoter;
  • Joint venture/Associate (as defined in terms of Ind AS 28) with the promoter;
  • Related party (as defined in terms of Ind AS 24) of the promoter; and
• D. in case the promoter is an individual:
  • any body corporate in which ten per cent or more of the equity share capital is held by the promoter or a relative of the promoter or a firm or Hindu Undivided Family in which the promoter or any one or more of his immediate relative is a member;
  • any body corporate in which a body corporate as provided in (4) (i) above holds ten per cent or more, of the equity share capital;
  • any Hindu Undivided Family or firm in which the aggregate shareholding of the promoter and his immediate relatives is equal to or more than ten per cent of the total; and
• E. all persons who are declared as promoters in the Articles of Association of the bank/ group companies.
• F. all persons whose shareholding is aggregated for the purpose of disclosing in the prospectus (As per SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2018) under the heading "shareholding of the promoter group";
• G. Entities sharing a common brand name with entities discussed in (C) (i), (C) (ii), (C) (iii), (C) (iv), (C) (v), where the promoter is a body corporate and (D) (i), (D) (ii), (D) (iii) where the promoter is an individual;

Provided that a financial institution, scheduled commercial bank, foreign institutional investor or mutual fund shall not be deemed to be promoter group merely by virtue of the fact that ten per cent or more of the equity share capital of the promoter is held by such institution unless such investment is strategic in nature.

4. ‘Shell bank’ has the same meaning as stated in Reserve Bank of India (Commercial Banks – Know Your Customer) Directions, 2025.

5. ‘Significant Beneficial Owner’ has the same meaning as stated in Companies (Significant Beneficial Owners) Rules, 2018.

C. Guidelines

C.1 Eligible Promoters

6. Individuals / professionals who are residents [as defined in FEMA Rules and Regulations, as amended from time to time] having 10 years of experience in banking and finance at a senior level would be eligible to promote banks, singly or jointly.

7. Entities / groups in the private sector that are ‘owned and controlled by residents’ [as defined in FEMA Rules and Regulations, as amended from time to time] and have a successful track record for at least 10 years, provided that if such entity / group has total assets of ₹5000 crore or more, the non-financial business of the group does not account for 40% or more in terms of total assets / in terms of gross income.

8. Existing non-banking financial companies (NBFCs), that are ‘controlled by residents’ [as defined in FEMA Rules and Regulations, as amended from time to time], and that have a successful track record for at least 10 years will be eligible to convert into a bank or promote a new bank. For the sake of clarity, it is added here that any NBFC, which is a part of the group that has total assets of ₹5000 crore or more and that the non-financial business of the group accounts for 40% or more in terms of total assets / in terms of gross income, is not eligible. If considered eligible for promoting / converting into a bank, they will have to comply with the requirements laid down in these guidelines as also the conditions specified in paragraphs 35 to 38 below.

9. Entities conforming to definition of Shell bank are not eligible to promote/set up banks in India.

10. Small Finance Banks, which are desirous of voluntarily transiting into Universal Bank, shall be guided by Chapter II of this Guidelines.