The Reserve Bank of India (RBI) has formed a five-member internal working group (IWG) to review the existing guidelines on ownership and corporate structure for Indian private sector banks (PSBs).

In light of the macroeconomic, financial market and technological developments, and its effect on the operations of the banking industry, the central bank has decided to realign the banking regulations.

The central bank has already issued guidelines related to on-tap licensing of universal banks and industrial houses operating as small finance banks.

The latest measures for ownership and control in the Indian PSBs is based on the framework issued in February 2005.

In its press release, the RBI stated that the principle of diversified ownership and that the shareholders should be fit remained unchanged. However, the licensing guidelines have continued to evolve as well.

Hence, the central bank has decided to review the extant guidelines on ownership, governance and corporate structure in PSBs.

The key developments in the PSBs over the years will be factored in while comprehensively reviewing these guidelines, the bank said.

The review is expected to harmonise the norms applicable to banks established at different time period, regardless of their commencement date.

The IWG panel will, accordingly, review the licensing and regulatory guidelines relating to ownership and control, promoters’ holding, requirement of dilution, control and voting rights, licensing eligibility and more.

The panel comprises of RBI central board directors Prasanna Kumar and Sachin Chaturvedi, executive directors Lily Vadera and S. C. Murmu, and chief general manager Shrimohan Yadav.

The review is expected to be completed by the end of September 2020.