Prior Approval for Acquisition of Shares or Voting Rights in Private Sector Banks
The Reserve Bank of India (RBI) has issued directions for prior approval for acquisition of shares or voting rights in private sector banks.
The directions are applicable to all private sector banks and are divided into eight chapters.
Key Provisions:
Chapter II outlines the directions on prior approval, while Chapter III details the procedure for application.
Chapter IV deals with prior approval in case of subsequent increase in shareholding, and Chapter V outlines the criteria for determining the “fit and proper” status of applicants.
Chapter VI discusses continuous monitoring arrangements for due diligence in case of existing major shareholders.
Chapter VII covers the acquisition of shares/voting rights for gaining controlling interest in a private sector bank.
Chapter VIII emphasizes compliance with other regulations.
The directions aim to ensure that private sector banks are owned and controlled by “fit and proper” persons, and that the RBI is informed of any changes in shareholding or voting rights.
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Download: Prior Approval for acquisition of shares or voting rights in Private Sector Banks: Directions, 2015