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RBI: Large corporates could also be allowed as promoters of banks: RBI Internal Working Group

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An inner working group constituted by the RBI has beneficial that giant industrial homes be allowed as promoters of banks.

The Internal Working Group (IWG) was constituted on June 12, 2020 to evaluate extant possession tips and company construction for Indian non-public sector banks.

“Large corporate/industrial houses may be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism for large conglomerates, including consolidated supervision,” the working group beneficial.

It additionally beneficial that properly run giant NBFCs with asset dimension of over Rs 50,000 crore be thought-about for conversion into banks topic to completion of 10 years of operation.

On promoter shareholding, the working group mentioned, “The cap on promoters’ stake in the long run (15 years) may be raised from the current level of 15 per cent to 26 per cent of the paid-up voting equity share capital of the bank.”

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