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RBI Accepts 21 of 33 Working Group Recommendations On Ownership of Private Banks

The Reserve Bank of India has accepted 21 out of 33 recommendations on the ownership of private banks from the working group committee. The remaining proposals are under consideration.

An initial reading of the release by the central bank shows that it may consider putting in place a tighter, bank-like regulatory framework for larger NBFCs (Non-Banking Financial Company).

Regarding ownership of private banks, the working group has recommended that the promoter holding need not be capped in the initial five years. However, the cap in the long run (15 years) may be raised from the current 15 percent to 26 percent of the paid-up voting equity share capital.

Further, the Central Bank has accepted the recommendation to disallow the pledge of promoter shares during the lock-in period.

The RBI on November 20 had released the report on the working group recommendations on private bank ownership and corporate structure.

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