Large bank shareholders’ voting cap said to remain

India plans to retain a cap on voting rights for large shareholders in domestic banks, two sources said, indicating that New Delhi’s efforts to liberalize the financial sector and attract more foreign investment will remain limited in scope.

The country’s banking regulator the Reserve Bank of India (RBI) has taken several steps in recent months to eliminate cumbersome rules and allow foreign lenders to take larger stakes in domestic banks.

The government also plans to more than double the foreign investment limit in state-owned lenders to 49%. reuters Reported last week. However, voting rights rules will not be relaxed yet, he said.

As per current rules, a single shareholder cannot hold more than 26% of the voting rights in a private bank, even if his ownership exceeds this. For government-owned banks this limit is 10%.

excessive control problem

India’s federal finance ministry and the RBI discussed raising the voting rights limit to give large shareholders more say in strategic decisions, but decided against it to avoid excessive control, the first source said.

The first source said the government wants safeguards such as a 26% cap on voting rights for a single shareholder to avoid making decisions alone.