MUMBAI, Nov 26 (Reuters) - India's central bank said on
Friday it would reform rules on the structure of private sector
banks but a source familiar with the matter said the changes
would not include allowing industrial groups to own lenders.
Under the new rules significant shareholders in a non-state
bank, known as bank promoters, must only reduce their stake to
26% stake after 15 years, the central bank said, rather than to
the current limit of 15% within that timeframe.
Bank promoters currently do not include industrial groups
whose holdings in a bank are capped at 10%.
A year ago an RBI working group recommended that banking
regulations be amended to allow large industrial groups to act
as bank promoters and own big stakes in a lender. Such a move
could transform the country's banking landscape but is something
the central bank has strongly resisted in the past.
Bajaj Group, Piramal Group and Reliance Industries
are well-positioned to expand into banking, an
investment banker who did not wish to be named said last year
when the working group made its recommendations.
A source familiar with the matter said on Friday, however,
that the RBI had decided against allowing corporates to own
The RBI said it was accepting 21 of 33 recommendations made
by the working group and had made some partial modifications
where it considered them to be necessary.
"The remaining recommendations are under examination," the
The central bank said payments banks must operate for at
least five years before applying to become small finance banks
(SFB), longer than the group's recommendation of three years of
operations as sufficient to graduate into an SFB.
On the new rule concerning the dilution of promoters'
stakes, the central bank said:
"This stipulation should be uniform for all types of
promoters and would not mean that promoters, who have already
diluted their holdings to below 26%, will not be permitted to
raise it to 26% of the paid-up voting equity share capital of
the bank," the RBI said.
Non-promoter share holdings will continue to be capped at
10% for individuals and non-financial institutions but will be
allowed up to 15% of the equity share capital of a bank in the
case of all categories of financial institutions, supranational
institutions, public sector bodies or government, the RBI said.
(Reporting by Swati Bhat and Nupur Anand; Editing by Kirsten
Donovan and Susan Fenton)