The Reserve Bank of India (RBI) on Thursday tweaked guidelines for ownership structure in private sector banks by allowing shareholding patterns in two broad categories of individuals and legal entities/institutions, but retained the cap on foreign ownership at 74%.
The new norms, which envisage diversified shareholding in private sector banks by a single entity/corporate entity/group of related entities, are aimed at helping them meet the additional capital under the international Basel-III regulations and to rationalise the ownership limits, the RBI said.
The RBI also stipulated separate limits for non-financial and financial institutions, which have been divided into diversified and non-diversified institutions.
The shareholding for non-financial entities and legal persons will be 10%, non-regulated or non-listed entities 15% and well regulated financial institutions can be at 40%.
“For all existing banks, the permitted promoter/promoter group shareholding will be in line with what has been permitted in the February 22, 2013, guidelines on licensing of universal banks at 15%,” it said.
In case any promoter/promoter group is eligible for higher shareholding as per the licensing guidelines, the same will apply and the limits prescribed for all shareholders in the long run will not apply.
{{/usCountry}}In case any promoter/promoter group is eligible for higher shareholding as per the licensing guidelines, the same will apply and the limits prescribed for all shareholders in the long run will not apply.
{{/usCountry}}“In case of financial institutions that are owned to the extent of 50% or more or controlled by individuals, the shareholding would be deemed to be by a natural person and the shareholding will be capped at 10%,” RBI said.
Under the new norms, the RBI has retained the provision of seeking its prior mandate if someone wants to increase shareholding/voting rights to 5% or more.
Also, the ‘fit and proper’ criterion for acquisition of shareholding in a private bank beyond 5% will continue.