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Informist, Thursday, Oct. 1, 2026

 

--RBI OKs simplified process for subsequent stake buy in banking cos 

--RBI: Simplifying process for MFs, PFs to add major shareholding in banks 

--RBI: Simplifying process for insurers to add major shareholding in banks 

 

MUMBAI – The Reserve Bank of India Thursday simplified the approval process for mutual funds, insurance companies, and pension funds seeking to make subsequent acquisitions of major shareholding in banks, allowing eligible investors to obtain a one-time approval for such purchases.

 

Under the amended directions, the RBI may, at its discretion, grant a one-time approval to eligible mutual funds, insurance companies and pension funds for subsequent acquisitions of major shareholding of up to 10% of the paid-up share capital or voting rights of banks. The approval can be granted to individual investors or collectively. 

 

The framework defines a qualifying person as a mutual fund registered with the Securities and Exchange Board of India, a pension fund registered with the Pension Fund Regulatory and Development Authority, or an insurance company registered with the Insurance Regulatory and Development Authority of India. Such an entity should not be part of the bank's promoter group.

 

The RBI said its earlier rules required prior approval not only for the initial acquisition of major shareholding but also for a subsequent acquisition if an investor's aggregate holding fell below 5%. The amended directions retain mandatory prior approval for initial acquisitions but introduce the one-time approval facility for subsequent acquisitions by the specified institutional investors. 

 

Applications for the one-time approval will have to be submitted through the RBI's PRAVAAH portal. The concerned bank will also have to provide its comments to the central bank. The approval will remain subject to the conditions specified by the RBI and other applicable provisions.

 

The central bank can revoke the one-time approval if the investor fails to comply with its conditions or if the investor, or any person associated with it, is subsequently found not to be "fit and proper". The 10% limit will be calculated on an aggregate basis. 

 

Investors granted one-time approval will also have to report any increase or decrease in their aggregate holding that crosses the 5% threshold to the RBI and the concerned bank within three working days of the event. The amended framework will apply immediately and covers commercial banks, small finance banks, payments banks and local area banks.  End

 

Reported by Kabir Sharma

Edited by Saji George Titus

 

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