RBI tough on promoter cap in pvt banks
NEWDELHI: The Reserve Bank of India could get tough with private banks that stillhave large promoter holdings as it deliberates norms for new banking licences,which are expected to come with tough riders.
The RBI is expected toput out a discussion paper on new licences by the end of this week or early nextmonth.
“It is expected that RBI will consider this issue(promoter holding in private banks). As the regulator for banking industry, itwill solely be RBI’s decision, however, two set of rules cannotco-exist,” said a senior finance ministry official.
The movecomes after some interested players have conveyed their apprehensions that thenew guidelines for banking licences may be unduly stringent even as some of theexisting banks continue to enjoy a liberal regime.
“There areconcerns that large industrial houses may misuse the banking licences but ifthere are existing cases then we also expect a similar lenient approach,”said a senior official of a company, interested in acquiring a bankinglicence.
As of now three private banks — Yes Bank, KotakMahindra and IndusInd bank — have promoter shareholding above theRBI’s prescribed norms. RBI’s existing guidelines do not favourgiving licences to industrial houses and impose restriction on the stakes anentity can have in them.
“The new bank should not be promotedby a large industrial house. However, individual companies, directly orindirectly connected with large industrial houses may be permitted toparticipate in the equity of a new private sector bank up to a maximum of 10%but will not have controlling interest in the bank,” the rulessay.
Yes Bank founderand managing director and CEO Rana Kapoor, however, said that there was no unduepressure from RBI to dilute the promoter’s stake.
“Weunderstand that RBI is in favour of diversified ownership, we welcome that.We’re looking at progressive dilution. We’ll dilute stake wheneverwe would require to raise capital,” he said, adding that even as a youngbank, they’ve followed the path and brought down promoter’s holdingfrom 75% to 27% in only six years.
A senior officer of the IndusIndBank, however, says that the RBI has already asked them to dilutepromoter’s stake to up to 10% by 2012.
“We’reworking towards that and any decision will be taken in conformity with views ofRBI,” the official said, adding, that a further extension is also notruled out. A senior official of the RBI agreed that the apex bank was indialogue with the private sector banks on the issues.
“In somecases, it has been formally conveyed, while in other cases, the understanding isthat banks’ will go ahead and dilute the promoter’s stake withoutcausing any financial instability to their business and the industryoverall,” he said.
The promoter shareholding in IndusInd Bankis 22.15%. Kotak Mahindra Bank, one of the latest entrants in the banking spacehas a promoter shareholding of over 48.17%, the largest in all 18 private sectorbanks.
source : economictimes.indiatimes.com
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