RBI proposes banks barred from using group entities to bypass regulations, suggests measures on investments and activities.

MUMBAI: Banks that have a large conglomerate structure will now have to consolidate similar activities under one entity, according to RBI's new draft .

India's central bank said on Friday group entities of banks shall not be used to circumvent guidelines applicable to the parent for carrying on business activities that are not otherwise permitted.

The RBI also said entities should avoid an overlap in the lending activities undertaken by the bank and its group entities

India's central bank mandates that group entities of banks cannot bypass parent guidelines for restricted business activities. Banks need RBI's prior approval for new group activities. No bank can hold over 30% of equity in any company with its group entities.