Pvt Bank Promoters May Be Allowed 15% Stake

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Pvt bank promoters may be allowed 15% stake official, the RBI move is welcome as it is impossible to dilute large stakes when the markets are so volatile. “We are awaiting clarifications from the PRIVATE sector banks are set to get RBI on promoters’ shareholding besome relief from the Reserve Bank fore reducing stake further,” he said. The RBI had earlier expressed of India (RBI) on promoters’ stake. The regulator had earlier asked these concern over high promoter sharebanks to submit a road map and give holding in many private sector banks, a time frame for paring promoters’ though most of these lenders had completed 10 years of operations. shareholding to 10 per cent. For instance, in IndusInd Bank, But, the central bank is now in which commenced opfavour of increasing that erations in 1994, prolimit to 15 per cent, acmoters hold 19.53 per cording to sources in the cent stake, while in RBI. The move comes af- after the draft DCB, which was conter the draft guidelines guidelines for new verted into a scheduled for new banking licences commercial bank in proposed that promoters banking licences 1995, promoters’ shareof new banks float a non- proposed that holding is 23.08 per cent. operative holding com- promoters of new Promoters of YES pany (NOHC), which banks float a Bank, the youngest bank would hold 40 per cent of non-operative in the country which bethe paid-up capital of the gan operations in 2003, bank for an initial period holding company currently hold 26.5 per of five years. It will then have to reduce its stake in the bank to cent stake. In case of Kotak Mahin20 per cent within 10 years and 15 per dra Bank, the promoter shareholdcent within 12 years from the date of ing is 45.5 per cent. However, sources indicate that licensing. “The plan to allow existing bank for HDFC Bank, the second-largest promoters to hold 15 per cent stake private sector bank in the country, will ensure a level playing field for the cap on promoters’ shareholding all the players,” a top official of a pri- will not be applicable, as its promotvate sector bank, who did not wish to er Housing Development Finance Corporation (HDFC), is a publicly be named, said. This will offer some comfort to held company. The promoters of HDprivate lenders such as Development FC Bank currently have 23.28 per Credit Bank (DCB), IndusInd Bank, cent stake in the bank. (The Kotak Mahindra group is a Kotak Mahindra Bank and YES significant shareholder in Bank, where promoters’ shareholdBusiness Standard Ltd, which ing continues to be high. publishes this paper.) According to another private bank MANOJIT SAHA & SOMASROY CHAKRABORTY Mumbai, 28 September


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