RBI has issued Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies. These Guidelines were issued on 16th January, 2023.
Some of the aspects covered by these Guidelines are as follows:
- Prior approval for acquisition of shares or voting rights in a banking company
Every person intending to acquire shares or voting rights and to become a major shareholder of a banking company must obtain prior approval of the RBI. Such person shall make an application to the RBI along with the declaration in Form A.
- Information to be provided for continuous monitoring
Major shareholders who have completed the approved acquisition or applicants who have obtained the approval to have major shareholding or applicants who have submitted the application for obtaining the prior approval must inform the banking company of any change in the information provided in Form A or any other development which may have a bearing on the ‘fit and proper’ status. This is in addition to furnishing the information sought by the banking company.
- Lock-in requirement
Where RBI permits a person to have a shareholding of 10 per cent or more of the paid-up equity share capital of the banking company but less than 40 per cent of the paid-up equity share capital, the shares acquired shall remain under lock-in for first five years from the date of completion of acquisition.
Where the person is permitted to have a shareholding of 40 per cent or more of the paid-up equity share capital of the banking company, only 40 per cent of paid-up equity share capital shall remain under lock-in for first five years from the date of completion of acquisition.
- Ceiling on voting rights
A shareholder in a banking company cannot exercise voting rights on poll in excess of 26 per cent of total voting rights of all the shareholders of the banking company.
Additionally, the Guidelines detail the limits on shareholding.