The Reserve Bank of India on Monday tweaked norms related to acquisition and holding of shares in banks to ensure that their ultimate ownership and control remain well diversified and the major shareholders are 'fit and proper' on a continuing basis.
The central bank has issued 'Master Direction — Reserve Bank of India (Acquisition and Holding of Shares or Voting Rights in Banking Companies) Directions, 2023'.
"These directions are issued with the intent of ensuring that the ultimate ownership and control of banking companies are well diversified and the major shareholders of banking companies are 'fit and proper' on a continuing basis," it said. As per the Master Direction, any person who intends to make an acquisition which is likely to result in major shareholding in a banking company is required to seek prior approval of the Reserve Bank by submitting an application.
"The decision of the Reserve Bank to (a) accord or deny permission or (b) accord permission for acquisition of a lower quantum of aggregate holding than that has been applied for, shall be binding on the applicant and the concerned banking company," it said. Subsequent to such acquisition, if at any point in time the aggregate holding falls below five per cent, the person will be required to seek fresh approval from the RBI if the person intends to again raise the aggregate holding to five per cent or more of the paid-up share capital or total voting rights, it added.