The Reserve Bank of India (RBI) on Thursday tweaked guidelines for ownership structure in private sector banks by allowing shareholding patterns in two broad categories of individuals and legal entities/institutions, but retained the cap on foreign ownership at 74%. The RBI also stipulated separate limits for non-financial and financial institutions, which have been divided into diversified and non-diversified institutions. The new norms, which envisage diversified shareholding in private sector banks by a single entity/corporate entity/group of related entities, are aimed at helping them meet the additional capital under the international Basel-III regulations and to rationalise the ownership limits, the RBI said. Also, the ‘fit and proper’ criterion for acquisition of shareholding in a private bank beyond 5% will continue. The shareholding for non-financial entities and legal persons will be 10%, non-regulated or non-listed entities 15% and well regulated financial institutions can be at 40%.

Source: Hindustan Times May 12, 2016 23:11 UTC