Reserve Bank changes rules related to acquisition for Banks

RBI Rule Change:

Mumbai. On Monday, the Reserve Bank of India changed the rules related to the acquisition and shareholding of banks.

The aim is to ensure that ownership and control of banks remain in different hands and that large shareholders continue to be ‘suitable.’

The central bank has issued the Master Guidelines (Acquisition of Shares and Holding or Voting Rights in Banking Companies) Directions, 2023, in this context.

Reserve Bank’s prior approval will have to be taken

RBI Rule Change: It states, “These directions have been issued to ensure that the ultimate ownership and control of banking

companies are well diversified and that the major shareholders of the bank entities remain suitable on an ongoing basis.”

Per the master guidelines, any person who intends to acquire and which is likely to result in a majority shareholding

in the associated bank shall obtain prior approval of the Reserve Bank by submitting an application.

It states that whatever decision the Reserve Bank takes in this context will be binding on the applicant and the bank unit concerned.

Need to get approval

RBI Rule Change: As per instructions, if at any time after such acquisition, the total holding falls below five percent,

the person may again increase the entire holding to five percent or more of the paid-up share capital. It will need to obtain fresh approval from RBI.

RBI said that bank units had been asked to make arrangements for receiving information about the acquisition of 10

percent or more of the paid-up share capital of the majority shareholder on behalf of the owner or any person.

Further, the bank entity shall implement a continuous monitoring system to ensure that a significant shareholder has obtained prior approval from the Reserve Bank regarding shareholding/voting rights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest

More Articles

- Advertisemet -