RBI proposes easing rules for mutual funds, insurers to acquire higher stake in banks
The Reserve Bank of India on Tuesday proposed allowing mutual funds, insurance companies and pension funds to retain a standing approval to acquire higher stakes
The Reserve Bank of India on Tuesday proposed allowing mutual funds, insurance companies and pension funds to retain a standing approval to acquire higher stakes in the same bank without seeking fresh regulatory clearance each time their holdings fall below the 5% threshold.The move is aimed at easing the regulatory compliance for large institutional investors already having significant holding in a bank. Significant investor is the one which has at any point of time a minimum 5% holding.The one-time approval would remain valid unless revoked, the central bank said in a draft amendments on acquisition and holding of shares or voting rights, inviting public comments by August 4, 2026. The draft covers regulations for commercial banks, small finance banks, payments banks and local area banks.Once approved, the directions would come into effect immediately, RBI said.The one-time approval can be used by existing significant investors for further acquiring up to 10% of the paid-up share capital or voting rights in a bank, the RBI said.The decision was taken following representations received from asset management companies "in order to simplify approval process for subsequent acquisitions of major shareholding in a banking company by mutual funds, insurance companies and pension funds," the regulator said.
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