Financial Daily from THE HINDU group of publications
Friday, Jan 30, 2004
Financial Daily from THE HINDU group of publications Friday, Jan 30, 2004 |
||
|
|
||
|
Money & Banking
-
Private Banks RBI announces new norms for transfer of shares in pvt banks Our Bureau
Mumbai , Jan. 29 THE Reserve Bank of India on Thursday announced a more transparent set of guidelines for granting its approval for transfer of shares in private sector banks. Under the guidelines, which will have an immediate effect, investors need permission for all subsequent acquisitions above five per cent shares in private banks. Hitherto, the RBI mandated that any acquisition by an individual/group taking its aggregate holding to 5 per cent of the paid-up capital of the bank needed its acknowledgement. But the policy for subsequent acquisitions was not clear. The RBI will constitute an independent advisory committee, which will make appropriate recommendations for dealing with applications for grant of acknowledgements. The guidelines by the central bank comes close on the heels of the Finance Ministry's recent relaxation raising the permissible FDI limit in private banks to 74 per cent from 49 per cent. The notification issued today, the RBI said, "RBI while granting acknowledgement (for up to 5 per cent) may require such acknowledgement to be obtained for subsequent acquisition at any higher threshold as may be specified.'' Where acquisition or investment by the applicant is at 10 per cent or more and up to 30 per cent, the RBI will also take into account, among other factors, the following: (i) Source and stability of the funds for the acquisition and the ability to access financial markets as a source of continuing financial support for the bank. (ii) The business record and experience of the applicant including any experience of acquisition of companies. (iii) The extent to which the corporate structure of the applicant will be in consonance with effective supervision and regulation of the bank. (iv) In case the applicant is a financial entity, whether the applicant is a widely held entity, publicly listed and a well established regulated financial entity in good standing in the financial community, said the circular. "In deciding whether or not to grant acknowledgement, the RBI may take into account all matters that it considers relevant to the application, including ensuring that shareholders whose aggregate holdings are above the specified thresholds meet the fitness and proprietary tests.'' The central bank has specified the criteria for an applicant to be a shareholder in a private bank such as integrity, reputation, compliance with tax laws, track record and source of funds of the applicant. It will also look at whether the applicant has been subject to any proceedings for disciplinary or criminal nature or whether the body has committed any malpractice or financial misconduct or has bad loans. Meanwhile, the regulator has not made any changes to the voting rights of investors and, therefore, is as per the Banking Regulation Act.
More Stories on : Private Banks | RBI & Other Central Banks | Mergers & Acquisitions
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|