RBI eases bank stake rules, allows one-time approval for MFs, insurers for holdings up to 10%

The amendments have come into effect immediately and apply to commercial banks, small finance banks, payments banks and local area banks.

Under the new framework, RBI may grant one-time approval, either individually or collectively, for subsequent acquisitions of major shareholding up to 10 per cent of the paid-up share capital or voting rights of a banking company.     

Applications for the one-time approval will have to be made through RBI’s PRAVAAH portal, while the concerned bank will also be required to furnish its comments to the central bank.

RBI can revoke the approval in case of non-compliance with its conditions or if the qualifying investor, or any person associated with it, is subsequently found to be not “fit and proper”.     

Investors covered by the one-time approval will also have to report to RBI and the concerned bank within three working days whenever their aggregate holding falls below or rises above the 5 per cent threshold.   

RBI had released the draft amendments on July 14 and sought stakeholder comments until August 4. The central bank said the feedback received had been examined and suitable modifications incorporated in the final directions.     

The final rules also clarify that a client’s acquisition need not be treated as an indirect acquisition by its portfolio manager if the client remains the registered owner of the shares and voting rights, the manager provides only non-binding advice and any voting is based on a specific mandate from the client.

The changes are aimed at reducing repeated regulatory approvals for eligible institutional investors while retaining RBI oversight over major bank shareholdings. (ANI)

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