Tata, Reliance and Birla will not be able to enter the banking sector, RBI did not accept the suggestion
Tata, Birla, Reliance may not get into Banking for now: Corporate houses like Tata, Birla and Reliance will not be able to enter the banking sector at present. These industrial houses planned to expand their business empire into banking. But the Reserve Bank of India (RBI) has stopped their entry. An internal group of RBI had given 33 suggestions, out of which 21 have been accepted. Another 12 suggestions are being considered by the central bank.
Let us inform that the scheme of entry of industrial houses in banks had to face opposition from former central bankers to politicians. The suggestions that have been accepted include raising the minimum capital requirement to Rs 1,000 crore and allowing promoters to own up to 26% of the company. By accepting this suggestion, billionaire Uday Kotak will take control of his bank. RBI said that this norm should be applicable to all types of promoters.
RBI will tighten the rules
Non-Banking Finance Companies (NBFCs) run by industrial houses like Tatas and Birlas face a double whammy. The central bank has announced that it will make the rules governing NBFCs as strict as the laws of banks. At the same time, in three years, the suggestion to convert payment banks into small finance banks has been rejected, which may have an impact on Paytm. Paytm is presently present in the payment bank sector.
RBI said that after considering the comments and suggestions received from the stakeholders, it has been decided to accept the 21 recommendations. The remaining recommendations are being considered. The central bank further said that it has approved the suggestion to increase the stake of promoters in commercial banks to 26 per cent from the current 15 per cent. Promoters will be able to increase their stake over a longer period of 15 years.
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