RBI: Former Governor said this about bank promoter stake of big corporate houses

Jun 30 2020 04:42 PM
RBI: Former Governor said this about bank promoter stake of big corporate houses

Indian central banks should rethink the rules that prevent large corporate houses from becoming promoters of banks. R Gandhi, former deputy governor of India's legendary bank, pointed out that any one body in banks should be allowed to raise the stake to over 26% with the necessary security measures. After which Gandhi said that the needs and expectations of the Indian economy are such that keeping in mind the entry of large capital sources in the banking sector should be considered. This can help simplify large schemes. He insisted on refocusing the entire service banking model.

During his tenure, Gandhi handled important banking regulation and supervision functions of the Reserve Bank. He said that the central bank has been applying for the banking license continuously for four years, despite all these, no serious application has been received. This statement of Gandhi came at a time when the Reserve Bank had private internal task force which has been formed this month to take ownership of the banks. This group will consider aspects such as promoters' reduced participation requirements, control and voting rights.

Gandhi said in a seminar at the payments company EPS that in my view, a serious partnership like 26% for a promoter or a strategic investor would definitely benefit the long-term interest of the bank and the banking industry. '' Kotak Mahindra Bank, while exempting banks, said that the Reserve Bank may take note of such steps. In the case of Kotak Mahindra Bank, the promoters group has been allowed to hold 26% participation in the long term, but the voting rights by them will be limited to 15%. They have increased the powers of independent directors, promoters' seats on the board of directors. Other aspects such as limiting and their ability to influence decision making were also suggested.

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