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The Reserve Bank of India has released an elaborate matrix of shareholding limits in private sector banks in view of the need for additional capital after implementing Basel III regulations and to rationalise ownership limits.
Ownership limits for all shareholders in the long run have been stipulated under two broad categories — natural persons (individuals) and legal persons (entities/institutions).
Further, separate limits have been stipulated for non-financial and financial institutions; and among financial institutions, for diversified and non-diversified financial institutions.
The shareholding limit for natural persons (individuals) and non-financial institutions/entities has been set at 10 per cent each. In both the cases, if any promoter is eligible for higher shareholding as per the licensing guidelines, then the same will apply and the limits prescribed for all shareholders in the long run in the matrix will not apply.
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