Raise private bank promoter cap: RBI panel

Why is it in news?
  • The Reserve Bank of India (RBI) panel has recommended raising the cap on promoters’ stake in private sector banks to 26% in the long run (15 years).
  • The holding is currently mandated at 15% of the paid-up voting equity share capital of the bank.
  • The panel was constituted to review the extant ownership guidelines and corporate structure for private sector banks in India.
More from the Panel:
  • Large corporate or industrial houses be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949.
  • NBFCs with an asset size of Rs. 50,000 crore and above, may be considered for conversion into banks subject to completion of 10 years of operations.
  • For Payments Banks intending to convert to a Small Finance Bank (SFB), their track record of three years should be considered sufficient.
  • Minimum initial capital requirement for licensing new banks be enhanced from ₹500 crore to Rs. 1,000 crore for universal banks.

Posted by Jawwad Kazi on 21st Nov 2020