RBI is not diluting NBFC rules; Foreign equity deals are subject to the same suitability test: R Gandhi

The Reserve Bank of India (RBI) has not diluted its regulatory stance on non-banking financial companies (NBFCs) or banks, and approvals for big share takeovers – especially by foreign investors – will continue to be subject to strict ‘fit and proper’ assessments, said R Gandhi, former deputy governor of the RBI.Speaking to ET Now, Gandhi said the recent spate of deal activity involving foreign institutions should not be interpreted as a change in regulatory approach. “The policy has always allowed large stakes in Indian banks and financial institutions, provided the investor meets the fit-and-proper criteria. What we are seeing now is greater seriousness from foreign institutions in actually seeking approval,” he said.

No quick foreign NBFC deals

According to Gandhi, the RBI’s due diligence framework for assessing investors remains unchanged and thorough. “There are no shortcuts in the process. The Reserve Bank will not lower its standards or compromise on controls as it examines ownership proposals,” he said, adding that timelines for approvals are likely to remain “normal” and in line with past practice.

He noted that previous interest from foreign investors was largely speculative, with few formal applications reaching the regulator. “Now foreign institutions submit concrete applications and once the RBI is satisfied with their credentials, approvals are granted,” Gandhi said.

The former deputy governor said the renewed interest from global investors reflects India’s growing attractiveness as a financial market, but stressed that regulatory safeguards remain paramount. “It is a welcome development that foreign institutions are keen to invest in India, but the RBI’s suitability assessment will remain the cornerstone of approvals for stake acquisitions in banks and NBFCs,” he said.

The comments come against the backdrop of increasing foreign interest in India’s financial sector, especially NBFCs and private lenders, as global investors look to tap long-term growth opportunities in the country while navigating a tightly regulated ownership framework.