July 14 (Reuters) – India’s RBI on Tuesday proposed easing rules for mutual funds, insurance companies and pension funds to raise their stakes in banks to up to 10%.
- The Reserve Bank of India has proposed that these investors will receive a one-time approval for subsequent acquisitions of major shareholding in a bank where they already hold a stake
- Under current rules, the investors must seek fresh approval each time their shareholding falls below 5% before they can raise it above that threshold
- The proposed change would eliminate the need for repeated approvals, making it easier for the investors whose holdings may fluctuate due to portfolio rebalancing or redemptions
- The proposal does not do away with the requirement of RBI approval for initial acquisition of a major shareholding in a bank
- The RBI has proposed that shareholders that have the one-time approval report any change in their aggregate holding below or above the 5% threshold within a day to the regulator and the concerned bank
- The RBI has invited public comments on the draft rules by August 4
