Business

RBI raises private bank promoter stake cap

The Reserve Bank of India has raised the long-term cap on promoters’ stakes in private sector banks, allowing them to hold 26% instead of the 15% in force currently.

Though the RBI did not say that the proposal to allow corporate houses to operate private banks, had been shelved, it said that the remaining 12 proposals were under examination.

“The cap on promoters’ stake in [the] long run of 15 years may be raised from the current levels of 15% to 26% of the paid-up voting equity share capital of the bank. 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 said.

“The promoter, if he/she so desires, can choose to bring down holding to even below 26%, any time after the lock-in period of 5 years,” it added.

An Internal Working Group in 2020 had suggested that corporates may be considered for running private sector banks.

The RBI has also doubled the initial paid-up voting equity share capital/ net worth required to set up a new universal bank, to ₹1,000 crore from the current ₹500-crore norm.

The RBI said an Internal Working Group (IWG) was constituted by it on June 12, 2020 to review the extant guidelines on ownership and corporate structure for Indian private sector banks.

The report submitted by the IWG was placed on the RBI website on November 20, 2020 inviting comments of stakeholders and members of the public by January 15, 2021.

“The IWG had made a total of 33 recommendations. After examining the comments and suggestions received from the stakeholders and members of the public, it has been decided to accept 21 recommendations (some with partial modifications, where considered necessary),” it said.

“The remaining recommendations are under examination,” it added.

“The consequential amendments in instructions/ circulars/ master directions/ licensing guidelines following the acceptance of the recommendations (with or without modifications) is being carried out and will be notified in due course. However, during the interregnum, all stakeholders may be guided by these decisions,” it further said.


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Printable version | Jan 26, 2022 6:07:01 PM | https://www.thehindu.com/business/rbi-raises-private-bank-promoter-stake-cap/article37711695.ece

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