An internal working group set up by the RBI has proposed to raise the cap on promoters’ stake in the private banks from the current 15% to 26% in fifteen years.
The group has a strong recommendation for the large corporates or industrial houses that could allow them as promoters of banks only after the amendments to the Banking Regulation Act. They have focused on strengthening the supervisory mechanism and consolidated supervision.
The Internal Working Group (IWG) was formed on June 12, 2020, to review extant ownership guidelines and corporate structure for Indian private sector banks.
There have been clear guidelines given on eligibility criteria for the individuals to apply for the banking license. Examination of preferred corporate structure for Indian private banks and harmony of rules in the aspect for smooth functioning.
The panel recommended running of large non-banking finance companies (NBFCs) with an asset size of Rs 50,000 crores and above, the list also includes the banks owned by corporate houses and has been in business for 10 years.