RBI changes Shareholding norms for Private Sector Banks

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The Reserve Bank of India issued new guidelines on ownership in private sector banks by bundling shareholding patterns into two broad categories of individuals (natural persons) and legal entities/institutions, but retained the cap on foreign ownership at 74 per cent.

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 Basel-III regulations and to rationalise the ownership limits, the RBI said.

Bundling the ownership limits for all shareholders into two broad categories of natural persons (individuals) and legal persons (entities/institutions), the RBI has stipulated separate limits for non-financial and financial institutions, which have been divvied into diversified and non-diversified institutions.

Ownership limits for all shareholders in the long run are now stipulated under two broad categories:

(i) natural persons (individuals) and

(ii) legal persons (entities/institutions).

Further, separate limits are now stipulated for (i) non-financial and (ii) financial institutions; and among financial institutions, for diversified and non-diversified financial institutions.