What changed
RBI has introduced new directions for commercial banks (excluding Small Finance Banks, Payment Banks, Local Area Banks, and foreign banks) to acquire and hold shares or voting rights in banking companies. The directions aim to ensure diversified ownership and control of banking companies. Major shareholders must meet fit and proper criteria on a continuing basis.
What it means for you
These directions will impact commercial banks (as defined) by requiring them to ensure that major shareholders are fit and proper. This will help maintain stability in the banking sector and prevent concentration of ownership.
What you must do
- Ensure major shareholders meet fit and proper criteria
- Obtain prior approval under Section 12B of the B R Act, 1949 for acquisition of shares or voting rights
- Implement continuous monitoring arrangements
- Maintain records of shareholding and voting rights
Who it affects
Commercial Banks (excluding Small Finance Banks, Payment Banks, Local Area Banks, and foreign banks), Major shareholders of banking companies
What is the purpose of these directions?
To ensure diversified ownership and control of banking companies and maintain stability in the banking sector.
Who is affected by these directions?
Commercial Banks (excluding Small Finance Banks, Payment Banks, Local Area Banks, and foreign banks) and major shareholders of banking companies.
What is the fit and proper criteria for major shareholders?
The criteria are specified in the Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies issued by RBI.