The RBI’s Prior Approval Requirement
The RBI (Non-Banking Financial Companies – Voluntary Amalgamation) Directions, 2025 mandate that prior no-objection certificate or approval from the RBI must be obtained before approaching the NCLT for sanction of any amalgamation scheme. The requirement applies to NBFC amalgamations and to changes in control or transfer of 26% or more shareholding.
The Banking Route
Voluntary amalgamations between two banking companies are governed by the Banking Regulation Act, 1949 and administered by the RBI. The scheme must comply with the RBI’s requirements, and the NCLT process runs in parallel or after the RBI approval. The RBI’s directions on scheme mergers require the parties to address KYC compliance, regulatory adherence, and lender consent where applicable.
The NCLT’s Reliance on the RBI NOC
The NCLT has sanctioned NBFC mergers where the RBI’s no-objection certificate was placed on record and the merger was undertaken pursuant to an RBI direction requiring the surrender of one NBFC licence post-merger. The NCLT’s order records the RBI NOC as a condition precedent to the scheme’s effectiveness.
The Sequencing Discipline
The RBI approval should be obtained before the NCLT first motion or, at the latest, before the NCLT’s sanction order. A scheme that is filed with the NCLT without the RBI NOC is vulnerable to adjournment or rejection. The parties should build the RBI approval timeline into the scheme schedule.
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