RBI keeps big business houses out of banking

1 month ago 27

MUMBAI: Reserve Bank of India has not accepted a proposal to consider large corporates or industrial houses for a banking licence.
It has however allowed promoters of banks to hold up to 26% in their banks, which is a positive for many lenders including Kotak Mahindra Bank, IndusInd Bank, Bandhan Bank and CSB Bank. The new norms allow those who have already diluted stakes to hike their shareholding.
RBI on Friday said it has accepted 21 of the 33 recommendations made last year by an internal working group to review extant ownership and corporate structure for Indian private sector banks. A key proposal that was accepted was to increase the capital requirement for new applicants to Rs 1,000 crore instead of Rs 500 crore.
In November 2020, the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks had said that corporates may be allowed as promoters of banks only after necessary amendments to the Banking Regulations Act, 1949. This would enable RBI to have the power to do consolidated supervision of conglomerates.
It had also said that well-run NBFCs including those owned by corporate houses should be considered for bank licences. Industry insiders speculate that Bajaj Finserv, L&T Finance and Piramal might be the corporate houses still interested in pursuing bank licences. While Bajaj is active in most banking activities, Piramal has acquired DHFL as part of its goal to increase retail business and has bought in a former banker to head its financial services.

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