Private bank promoters can hold up to 26% stake after 15 years

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Mumbai, November 26

The Reserve Bank of India on Friday accepted most of the recommendations of its working group on corporate ownership of private sector banks, by allowing unrestrained promoter shareholding in the first five years of operations and hiking the same to 26% after 15 years from the extant 15% and also the new capital requirements.

The move will benefit leading banks like Kotak Mahindra Bank and IndusInd Bank, among others, which have been seeking more time from the regulator to divest their stakes for many years.

Accepting 21 of the 33 recommendations of the internal working group, the central bank said the remaining suggestions are under its consideration. The RBI constituted the working group on June 12, 2020, and the panel submitted the report on November 20, 2020, inviting comments of stakeholders and members of the public by January 15, 2021.

The RBI accepted the recommendation that no changes be made to the extant instructions related to the initial lock-in requirements of holding a minimum 40% of the paid-up voting equity share capital of the bank for the first five years but said no cap on the promoters holding during the same period. — PTI

Unrestrained holding for first five years

• The RBI has allowed unrestrained promoter shareholding in the first five years of operations and hiking the same to 26% after 15 years from the extant 15%
• The move will benefit leading banks like Kotak Mahindra Bank and IndusInd Bank, among others, which have been seeking more time from the regulator to divest their stakes for many years now

The Tribune