Indian Banks, through the Indian Banks’ Association (IBA), have appealed to the Reserve Bank of India (RBI) for an extension of up to five years to fully comply with new regulations. The regulations are aimed at preventing overlapping lending activities within banking groups. The RBI’s draft circular, issued in October, currently proposes a two-year implementation period for these changes.
The regulations stipulate that only one entity within a banking group can engage in a specific type of permissible business. It eliminates overlap in lending operations between banks and their group entities. This move is expected to significantly impact major financial institutions including – HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Canara Bank, and Federal Bank. All of them currently operate subsidiaries engaged in parallel lending activities.
