RBI sets up panel to review corporate structure of private sector banks

The Reserve Bank of India (RBI) said on Friday it had formed an internal task force to review guidelines on ownership and corporate structure of private sector banks.

“The review would be an opportunity to harmonize the standards applicable to banks created in different periods, regardless of when they started operating,” the central bank said in a statement.

The RBI said it is doing so to align regulations to meet the demands of a dynamic banking landscape, which is continuously changing due to macroeconomic, financial market and technological developments.

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“While the fundamental principle that the ownership and control of private sector banks should be well diversified and that major shareholders should be ‘fit and proper’ remains unchanged, the specific contours have evolved over the years, with specific requirements being data under licensing guidelines issued at various times in the past,” the central bank said.

Therefore, there is a need for a thorough review of the existing guidelines on ownership, governance and corporate structure in private sector banks, he said.

The internal group will review and revise existing licensing and regulatory guidelines regarding ownership and control, sponsor participation, dilution requirement, control and voting rights, etc.

The group includes Prasanna Kumar Mohanty and Sachin Chaturvedi (both Directors, RBI Central Council), Lily Vadera and SC Murmu (both Executive Directors) and Shrimohan Yadav (Chief Managing Director of RBI).

The announcement came a day after the central bank published a draft document stating that a bank’s promoter or major shareholder cannot serve as CEO or full-time director for more than 10 years. .

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