India's central bank is examining shareholding norms and licensing rules for banks as part of a broader review, Governor Sanjay Malhotra told the Times of India in an interview, less than a month after Japanese lender Sumitomo Mitsui signed a deal to acquire 20% in Yes Bank.
While India permits 74% foreign direct investment in private banks, it restricts a single financial entity from holding more than 15% unless a regulatory exemption is granted.
The rules also require a bank promoter - a large shareholder with management control - to reduce shareholding in a bank to 26% over a 15-year period. A 26% cap on voting rights is also imposed, both for domestic and foreign investors.
"We are examining this in totality as part of our internal examination. We will review all aspects of the eligibility conditions," Malhotra told the newspaper when asked about increasing shareholding limits further, in particular for foreign banks wanting to come to India.
