An internal working group constituted by the RBI has recommended that large industrial houses be allowed as promoters of banks.The Internal Working Group (IWG) was constituted on June 12, 2020 to review extant ownership guidelines and corporate structure for Indian private sector banks.”Large corporate/industrial houses may be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism for large conglomerates, including consolidated supervision,” the working group recommended.It also recommended that well run large NBFCs with asset size of over Rs 50,000 crore be considered for conversion into banks subject to completion of 10 years of operation.On promoter shareholding, the working group said, “The cap on promoters’ stake in the long run (15 years) may be raised from the current level of 15 per cent to 26 per cent of the paid-up voting equity share capital of the bank.”
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