India’s central banking authority has made changes to the rules on the ownership and corporate structure of private sector banks.
The Reserve Bank of India has decided to raise the limit of the stake promoters can sell in 15 years from 15% to 26%.
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The central bank had set up an internal working group (IWG) in June 2020 to review the guidelines for ownership and corporate structure for Indian private sector banks.
It has accepted 21 out of the 33 recommendations made by the group with partial modifications, where it consideres necessary and the remaining recommendations are under examination.
“This stipulation should be uniform for all types of promoters and would not mean that promoters, who have already diluted their holdings to below 26%, will not be permitted to raise it to 26% of the paid-up voting equity share capital of the bank,” the RBI noted.
Notably, bank promoters do not include industrial giants such as Bajaj Group, Reliance industries and Piramal Group, who can only own up to 10% in a bank.
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By GlobalDataAs per Reuters’ report, earlier, a working group had recommended amending regulations to allow large industrial groups to own a large stake in a bank.
However, the RBI is not in favour of allowing large corporate groups to own a controlling stake in lenders, the publication said citing sources.
Additionally, shareholding for individuals and non-financial groups will be capped at 10%; however, all types of financial institutions, supranational institutions, public sector bodies or government can increase non-promoter shareholding up to 15%.
