It specified that multiple entities within a bank group cannot undertake the same business or hold/acquire the same category of license/authorisation or registration from any financial sector regulator.
Additionally, there can be no overlap in the lending activities undertaken by the bank and its group entities. Moreover, RBI has said that the non-bank subsidiary of banks will be considered upper layer NBFCs and will be subject to regulatory and other restrictions on loans and advances applicable to banks. The norms would apply two years after the final circular is issued by RBI.
Meanwhile, Citi analysts, in their report, have said that there is a need to monitor if recalibration of business model or merging lending businesses of group entities is recommended, according to a Bloomberg report.
Axis Bank has Axis Finance as its NBFC subsidiary, ICICI Bank has ICICI Home Finance, Kotak Mahindra Bank has Kotak Mahindra Prime and Kotak Mahindra Investments, and Federal Bank has Fedbank Financial Services.