Board nod must for bank entities to do same biz: RBI

The Reserve Bank of India (RBI) on Friday allowed multiple entities in a bank group to undertake the same business as long as they cater to different client segments, while mandating board approval to ensure that any overlap in business has proper rationale and justification.

- SUBRATA PANDA

“To allow flexibility in the manner in which a bank wishes to conduct its business, the suggestion has been accepted. However, to ensure that the overlap in businesses undertaken by the bank group has proper rationale/justification, board approval is being mandated,” the central bank said on Friday.

Previously, in a draft circular in 2024, the RBI had proposed that only a single entity within a bank group (the bank and its group entities) can undertake a particular form of permissible business.

The banking sector had requested the central bank to allow multiple entities in a bank group to undertake the same business but catering to different segments based on geography, customer profile, ticket size, etc.