**Executive Summary**
This document contains the Reserve Bank of India (Commercial Banks - Voluntary Amalgamation) Directions, 2025, issued on November 28, 2025, which outline the process and requirements for voluntary amalgamation of commercial banks. The directions cover preliminary matters, approvals required from the Board of Directors, Shareholders, and the RBI, entitlement of dissenting shareholders and norms for buying/selling of shares by promoters. All required information and documents must be submitted to the RBI.
**Key Points / Main Content**
* **Preliminary Matters:**
* The directions are called the Reserve Bank of India (Commercial Banks - Voluntary Amalgamation) Directions, 2025, effective immediately.
* These Directions apply to all Commercial Banks, excluding Small Finance Banks, Payment Banks, Local Area Banks, and Foreign Banks.
* Defines terms like 'Amalgamated Entity', 'Amalgamating Entity', 'Amalgamation', and 'Tribunal'.
* Scope includes the amalgamation of two banks, a bank with SFB/LAB/PB, or an NBFC with a bank or vice versa.
* **Approval by Board of Directors and Shareholders:**
* Amalgamation requires approval by a two-thirds majority of the total Board members of both banks.
* 'Deeds of Covenants' must be obtained from all independent and non-executive directors.
* The Board must assess due diligence, changes to board composition, consideration to shareholders, fairness of the swap ratio, shareholding patterns, and asset/liability valuation.
* For NBFC amalgamation, the Board must examine compliance with RBI/SEBI norms and KYC norms.
* The draft scheme requires shareholder approval by a majority representing two-thirds in value.
* Notices of shareholder meetings must be published weekly for three weeks in local newspapers.
* **Approval or Sanction by RBI:**
* Following shareholder approval, the scheme must be submitted to RBI for approval or sanction.
* For NBFC amalgamation, Tribunal approval is required, after obtaining a 'No-Objection Certificate' from RBI.
* Information and documents must be submitted via the PRAVAAH portal (https://pravaah.rbi.org.in).
* Specific documentation requirements are outlined in the Annex for bank-bank and bank-NBFC amalgamations.
* **Other Provisions:**
* Dissenting shareholders can claim the RBI-determined value of their shares within three months of sanction.
* SEBI regulations on insider trading must be followed during amalgamation of listed companies.
* Existing directions are repealed, but actions taken under them remain valid.
* These directions are additional to other applicable laws.
* RBI may issue clarifications to resolve difficulties in interpreting these Directions.
**Impact Analysis**
**Commercial Banks:**
* **Impact:** Subject to the rules and procedures outlined in the document for voluntary amalgamation, including those related to obtaining approval from their Board of Directors, shareholders, and the RBI.
* **Action Required:** Comply with all requirements outlined in the document, including preparing and submitting the required information and documentation to the RBI via the PRAVAAH portal.
**Non-Banking Financial Companies (NBFCs):**
* **Impact:** Subject to specific requirements and considerations in the event of amalgamation with a bank.
* **Action Required:** Ensure compliance with additional stipulations, including obtaining a 'No-Objection Certificate' from the RBI, and Tribunal approval, alongside all other applicable stipulations outlined in the document.
**Shareholders:**
* **Impact:** Have the right to approve the scheme of amalgamation and dissenting shareholders have a right to claim compensation for their shares.
* **Action Required:** Attend the shareholder meetings, vote on the resolution, and exercise their rights as dissenting shareholders, if applicable.
**Board of Directors:**
* **Impact:** Charged with ensuring proper due diligence, compliance with regulations, and fairness of the swap ratio.
* **Action Required:** Give particular consideration to the various matters listed in the document, to ensure compliance with the Reserve Bank guidelines / directives.
Key Entities Referenced
Reserve Bank of India: The primary regulator and sanctioning authority for bank amalgamations, responsible for issuing these directions.
Reserve Bank of India (Commercial Banks - Voluntary Amalgamation) Directions, 2025: The document itself; establishes the rules and procedures for voluntary amalgamations of commercial banks.
Banking Regulation Act, 1949: A foundational law that grants the Reserve Bank of India the power to regulate banking operations, including amalgamations.
Tribunal: The National Company Law Tribunal is a body required to provide approval for the voluntary amalgamation of an NBFC with a bank or vice versa as per the Companies Act, 2013.
Commercial Banks: The main entities to which these directions apply, as defined in Section 5 of the Banking Regulation Act, 1949.
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
RBI/DoR/2025-26/146
DoR.HOL.REC.65/16-13-100/2025-26 November 28, 2025
Reserve Bank of India (Commercial Banks - Voluntary Amalgamation)
Directions, 2025
Table of Contents
Chapter I - Preliminary ...................................................................................................... 2
A. Short Title and Commencement .............................................................................. 2
B. Applicability ............................................................................................................... 2
D. Scope ......................................................................................................................... 3
Chapter II – Approval by Board of Directors and Shareholders ................................... 4
A. Approval by Board of Directors ............................................................................... 4
B. Approval by Shareholders ....................................................................................... 5
Chapter III – Approval or sanction by RBI ...................................................................... 6
Chapter IV – Entitlement of dissenting shareholders .................................................... 7
Chapter V – Norms for buying / selling of shares by promoters .................................. 8
Chapter VI – Repeal and Other Provisions ..................................................................... 9
A. Repeal and saving ..................................................................................................... 9
B. Application of other laws not barred ....................................................................... 9
C. Interpretations ........................................................................................................... 9
Annex ............................................................................................................................... 11In 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 so to do, 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 (Commercial Banks
– Voluntary Amalgamation) Directions, 2025.
2. These Directions shall come into force with immediate effect.
B. Applicability
3. These Directions shall be applicable to Commercial Banks (hereinafter collectively
referred to as ‘Banking Companies or banks’ and individually, as a ‘Banking
Company’ or bank).
For the purpose of these Directions, ‘Commercial Banks’ means banking
companies (as defined under clause (c) of Section 5 of Banking Regulation Act,
1949) other than Small Finance Banks, Payment Banks, Local Area Banks and
Foreign Banks.
C. Definitions
4. In these directions, unless the context states otherwise, the terms herein shall
bear the meanings assigned to them below:
(1) ‘Amalgamated Entity’ means the entity which is proposed to transfer its
business to another entity under the scheme of amalgamation.
(2) ‘Amalgamating Entity’ means the entity which is to acquire the business
of the amalgamated entity under the scheme of amalgamation.
(3) ‘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.
2(4) ‘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:
(1) Two banks
(2) A bank with Small Finance Bank (SFB), Local Area Bank (LAB) and
Payments Bank (PB) or vice versa.
(3) A Non-Banking Financial Company (NBFC) with a bank or vice versa.
3Chapter 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 (Commercial 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:
(1) Whether due diligence exercise has been undertaken in respect of the
amalgamated entity.
(2) 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.
(3) The nature of the consideration that the amalgamating entity will pay to the
shareholders of the amalgamated entity.
(4) 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.
(5) 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.
(6) 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.
4(7) 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
bank shall, in addition to the requirement stipulated in paragraph 8, also examine
whether:
(1) 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.
(2) The NBFC has complied with the ‘Know Your Customer’ norms for all the
accounts.
(3) 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 of these Directions, 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.
5Chapter 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:
(1) Amalgamation of two banks: The amalgamating and amalgamated banks
shall submit the information and documents in accordance with the
requirements specified in Annex.
(2) 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.
6Chapter IV – Entitlement of dissenting shareholders
14. In terms of Section 44A (3) of the Banking Regulation Act, 1949, a dissenting
shareholder is entitled, in the event of the scheme being sanctioned by RBI, to
claim within three months from the date of sanction, from the entity concerned,
the value of the shares held by the shareholder in that entity, as determined by
RBI when sanctioning the scheme. Such determination by the RBI of the value
of the shares shall be final for all purposes.
7Chapter V – Norms for buying / selling of shares by promoters
15. In case of amalgamation of listed companies, SEBI regulations on Prohibition of
Insider Trading shall be adhered to, as the information relating to amalgamation
and transfer of shares are price sensitive. Even in cases of amalgamation of
unlisted companies, the SEBI regulations and guidelines should be followed in
spirit and to the extent applicable.
8Chapter VI – Repeal and Other Provisions
A. Repeal and saving
16. With the issue of these Directions, the existing Directions, instructions, and
guidelines relating to voluntary amalgamation as applicable to private sector
banks stand repealed, as communicated vide circular DOR.RRC.REC.302/33-
01-010/2025-26 dated November 28, 2025. The directions, instructions, and
guidelines repealed prior to the issuance of these Directions shall continue to
remain repealed.
17. Notwithstanding such repeal, any action taken or purported to have been taken,
or initiated under the repealed Directions, instructions, or guidelines shall
continue to be governed by the provisions thereof. All approvals or
acknowledgments granted under these repealed lists shall be deemed as
governed by these Directions. Further, the repeal of these directions,
instructions, or guidelines shall not in any way prejudicially affect:
(1) any right, obligation or liability acquired, accrued, or incurred thereunder;
(2) any, penalty, forfeiture, or punishment incurred in respect of any
contravention committed thereunder;
(3) any investigation, legal proceeding, or remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid;
and any such investigation, legal proceedings or remedy may be instituted,
continued, or enforced and any such penalty, forfeiture or punishment may
be imposed as if those directions, instructions, or guidelines had not been
repealed.
B. Application of other laws not barred
18. The provisions of these Directions shall be in addition to, and not in derogation
of the provisions of any other laws, rules, regulations, or directions, for the time
being in force.
C. Interpretations
19. For the purpose of giving effect to the provisions of these Directions or in order
to remove any difficulties in the application or interpretation of the provisions of
these Directions, the RBI may, if it considers necessary, issue necessary
9clarifications in respect of any matter covered herein and the interpretation of any
provision of these Directions given by the RBI shall be final and binding.
(Scenta Joy)
Chief General Manager
10Annex
Information and documents to be furnished along with the application of
Scheme of Amalgamation
A. Approval by Shareholders
1. Draft scheme of amalgamation as placed before the shareholders of the respective
companies for approval.
2. Copies of the notices of every meeting of the shareholders called for approval of
scheme of amalgamation, together with newspaper cuttings evidencing
compliance with the notice publication requirements set out in paragraph 11 of
these Directions.
3. Certificates signed by each of the officers presiding at the meeting of shareholders
certifying the following:
(1) A copy of the resolution passed at the meeting;
(2) The number of shareholders present at the meeting in person, or by proxy;
(3) The number of shareholders who voted in favour of the resolution, and the
aggregate number of shares held by them;
(4) The number of shareholders who voted against the resolution, and the
aggregate number of shares held by them;
(5) The number of shareholders whose votes were declared as invalid, and the
aggregate number of shares held by them;
(6) The names and ledger folios of the shareholders who voted against the
resolution, and the number of shares held by each such shareholder;
(7) The names and designations of the scrutineers appointed for counting the
votes at the meeting together with certificates from such scrutineers
confirming the information given in items (3) to (6) above;
(8) The name of shareholders who have given notice in writing to the Presiding
Officer that they dissented from the scheme of amalgamation together with
the number of shares held by each of them.
114. Certificates from the concerned officers of the companies giving names of
shareholders, if any, who have given notice in writing at or prior to the meeting of
the bank that they dissented from the scheme of amalgamation together with the
number of shares held by each of them.
B. Governance-related information
5. The names, addresses, and occupations of the Directors of the amalgamating
company as proposed to be reconstituted after the amalgamation and indicating
how the composition will be in compliance with the RBI regulations.
6. The details of the proposed Chief Executive Officer of the amalgamating company
after the amalgamation.
C. Financial information of each company separately
7. All relevant information for consideration of the scheme of amalgamation including
the following particulars:
(1) annual reports of each of the companies for each of the three completed
financial years immediately preceding the Appointed Date for amalgamation.
(2) financial results, if any, published by each of the companies for any period
subsequent to the financial statements prepared for the financial year
immediately preceding the Appointed Date.
D. Post-amalgamation financial information
8. Pro-forma combined balance sheet of the amalgamating company as it will appear
as of the Appointed Date consequent on the amalgamation.
9. Computation based on such pro-forma balance sheet of the following:
(1) Tier I Capital
(2) Tier II Capital
(3) Risk-Weighted Assets
(4) Gross and Net NPAs
(5) Ratio of Tier I Capital to Risk-Weighted Assets
(6) Ratio of Tier II Capital to Risk Weighted Assets
12(7) Ratio of Total Capital to Risk Weighted Assets
(8) Tier I Capital to Total Assets
(9) Ratio of Gross and Net NPAs to Advances
E. Report of valuers
10. Reports of the valuers including report on the valuation of the shares of the
amalgamating / amalgamated company for the determination of the swap ratio.
11. Information certified by the valuers as is considered relevant to understand the
proposed swap ratio including the following particulars:
(1) the methods of valuation used by the valuers;
(2) the information and documents on which the valuers have relied and the
extent of the verification, if any, made by the valuers to test the accuracy of
such information;
(3) if the valuers have relied upon projected information, the names and
designations of the persons who have provided such information and the
extent of verification, if any, made by the valuers in relation to such
information;
(4) details of the projected information on which the valuers have relied;
(5) detailed computations of the swap ratios containing explanations for
adjustments made to the published financial information for the purposes of
the valuation;
(6) if these adjustments are made based on valuations made by third parties,
details regarding the persons who have made such valuations;
(7) capitalization factor and Weighted Average Cost of Capital (WACC) used for
the purposes of the valuation and justification for the same;
(8) if market values of shares have been considered in the computation of the
swap ratio, the market values considered and the source from which such
values have been derived;
(9) if there are more than one valuer, whether each of the valuers have
recommended a different swap ratio and if so, the above details shall be
13given separately in respect of each valuer, and it may be indicated how the
final swap ratio is arrived at.
12. Where the shares of the amalgamating / amalgamated entity are quoted on the
stock exchange:
(1) Details of the monthly high and low of the quotes on the exchange where the
shares are most widely traded together with number of shares traded during
the six months immediately preceding the date on which the scheme of
amalgamation is approved by the Boards;
(2) The quoted price of the share at close on each of the fourteen days
immediately preceding the date on which the scheme of amalgamation is
approved by the Boards.
F. Other information
13. Such other information and documents as RBI may require.
14