RBI plans easier rules for bank stake acquisition
The Reserve Bank of India (RBI) has proposed to grant a one-time approval for future acquisitions of major shareholding in a bank to eligible mutual funds, insurance companies and pension funds if their stakes fall below 5%. Once such approval is granted, these institutions will not need to seek RBI approval every time they re-acquire a stake of up to 10%, provided they continue to comply with all regulatory conditions and the approval has not been revoked, the RBI said in the draft Reserve Bank of India (Commercial Banks — Acquisition and Holding of Shares or Voting Rights) Amendment Directions, 2026.Under the existing 2025 Master Direction, if an institution’s holding falls below 5% and it later wishes to increase it again to a major shareholding, they must seek fresh RBI approval. This requirement ensured continuous monitoring, and also resulted in repeated regulatory approvals for large institutional investors. The objective of this revision is apparently to simplify the approval process for institutional investors while maintaining regulatory oversight over ownership in the banking sector. To qualify for this facility, the investor must be registered with the appropriate regulator — SEBI for mutual funds, IRDAI for insurance companies or PFRDA for pension funds. The institution should not belong to the promoter group or group entities of the concerned banking company, it said.
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