RBI has amended the regulatory framework for Non-Operative Financial Holding Companies (‘NOFHCs’) following a review of earlier instructions and to align with updated entity-wise Master Directions issued by the RBI on November 28, 2025 (‘Master Directions’) and streamline the permitted and non-permitted activities of an NOFHC.

Key aspects of the amendment are as follows:

i.    while all activities permitted under Section 6(1)(a) to (o) of the Banking Regulation Act, 1949 (‘BR Act’) are to be carried out by the bank itself, specialised activities such as mutual fund business, insurance business, pension fund management, investment advisory and management services, portfolio management services and broking services as mentioned in paragraph 45 of the Master Directions, must be undertaken only by subsidiaries, joint ventures and associate companies under the NOFHC;

ii.   NOFHCs do not require prior approval of RBI for group entities held by them undertaking specialised activities listed in paragraph 45 of the Master Directions, unless specified otherwise, but a prior intimation to RBI by the NOFHC is required within 15 days from the date of the board resolution approving the undertaking any of such business activities; and

iii.  any business activities other than those listed in paragraph 45 of the Master Directions can be undertaken by the entities held by an NOFHC only after obtaining the prior approval from the RBI and NOFHC group entities are prohibited from engaging in any activity that the bank itself is not permitted to undertake under applicable law.