MANU/DBOD/0034/2005
Ministry : Reserve Bank of India
Department / Board :
Department of Banking Operations and Development
Circular No. : DBOD.No.PSBS.BC.89/16.13.100/2004-05
Date : 11.05.2005
Notification/ Circulars Referred:116/ 08.139.001/2001-02 MANU/DBOD/0040/2002 116/ 08.139.001/2001-02 MANU/DBOD/0040/2002
Referred IN
All Scheduled Commercial Banks
Guidelines for Merger /Amalgamation of Private Sector Banks
Reserve Bank of India had constituted, on the recommendations of the Joint
Parliamentary Committee (2002), a Working Group to evolve guidelines for
voluntary mergers involving banking companies. Based on the recommendations of
the Group, the guidelines laying down the process of merger proposal,
determination of swap ratios, disclosures, the stages at which Boards will get
involved in the merger process and norms of buying / selling of shares by the
promoters before and during the process of merger have since been finalised. The
detailed guidelines are enclosed.
2. While dealing with the merger proposals between two banking companies or
between a banking company and a non-banking financial company, banks may act in
accordance with the enclosed guidelines. Boards of the banks have to play a
crucial role in the process. It may be ensured that the decision of merger
should be approved by two third majority of the total Board members and not
those present alone. However, in view of the importance of the responsibility
implicit in such merger decisions, it will be necessary that the directors who
participate in such meetings are signatories to the Deeds of Covenants as
recommended by Ganguly Working Group on Corporate Governance, forwarded to banks
vide our circular DBOD.No.BC.116/ 08.139.001/2001-02 dated June 20, 2002.
3. The principles underlying the above guidelines would also be applicable as
appropriate to public sector banks.
Sd/-
(Prashant Saran)
Chief General Manager
Guidelines for merger/amalgamation of private sector banks