The RBI committee recommended increasing the share of promoters in private banks to 26 per cent

New Delhi, Friday 20 November 2020

A working group of the Reserve Bank of India has recommended raising the promoter holding of private banks from the current 15 per cent to 26 per cent in 15 years. The recommendation was made by a group of experts constituted by the central bank to amend the banking regulation law and strengthen the oversight system for the group to allow even large companies or industrial groups to become promoters of banks.

The Reserve Bank formed an internal working group on June 12, 2020 to review guidelines and company structure owned by Indian private sector banks, the central bank group report released on Friday.

Regarding the eligibility of promoters, the group said that large companies-industrial families could be allowed to become promoters of banks after the Banking Regulation Act, 1949 was amended to deal with the issue of interconnected debt and debt between banks and other financial and non-financial group units.

The report also recommended that non-banking companies (NBFCs) with administrative assets of Rs 50,000 crore and above be considered for conversion into a bank, including one unit which is a corporate house, but It requires 10 years of experience.

The report also recommended that the maximum initial capital for new licenses for full banking services (Universal) be increased from Rs 500 crore to Rs 1,000 crore, while for small banks from Rs 200 crore to Rs 300 crore.