• IND RBI issued the Master direction RBI (acquisition and shareholding or voting rights in banking companies) directions, 2023 and accompanying guidelines.
• The master direction may be read along with the Guidelines on acquisition and shareholding or voting rights in banking companies issued by IND RBI (guidelines).

Overview

• Ensure ultimate ownership and control of banking companies are well diversified and major shareholders of banking companies are fit and proper on a continual basis.
• Applies to banking companies (defined in clause (c), s. 5 of Banking regulation act, 1949), incl local area banks, small finance banks, payments banks operating in India.
• Includes prior approval procedure, due diligence, detecting violation of s.12B(1) Banking regulation act, 1949, diversified shareholding and reporting requirements.

Effectiveness

• The directions are effective from the date of issue, 16 January 2023.
• Related master directions from 2015, 2016 on prior approval for acquisition, issue and pricing of shares, and ownership in private sector banks are repealed from same date.