MANU/RPRL/0207/2015
Ministry : Reserve Bank of India
Department/Board : RBI
Press Release No. : 2015-2016/1189
Date : 19.11.2015
RBI issues Directions for obtaining Prior Approval for Acquisition of Shares/Voting Rights in Private Sector Banks
The Reserve Bank of India today issued
revised Directions necessitating prior approval for acquisition of shares or voting rights in private sector banks.
These Directions contain two major changes:
(i) A person intending to acquire shares or compulsorily convertible debentures/bonds or voting rights or convert optionally convertible debentures/bonds of 5 per cent or more in a private sector bank, he/she will have to apply to the Reserve Bank for obtaining its prior approval.
(ii) The major shareholders that is, shareholders having 5 per cent or more of the paid-up share capital of the bank as indicated above, would have to give an annual declaration to the concerned bank on their 'fit and proper' status and if in the bank's assessment any major shareholder is not 'fit and proper', it will have to immediately furnish the requisite information to the Reserve Bank.
The revision was necessitated in the context of the Banking Law (Amendment) Act, 2012, notified in the Gazette Notification dated January 17, 2013. The details are provided in the Directions dated November 19, 2015.
The Directions build on the existing policy and illustrate the procedure to be followed for seeking prior approval for acquisition of major shareholding in private sector banks.
The Directions also lay down a process for ensuring continuing compliance with the 'fit and proper' criteria for the major shareholders of private sector banks.
Highlights:
Prior approval for acquisition