Bank privatisation: RBI unlikely to allow an exception for ownership changes

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The Reserve Bank of India (RBI) may not provide an exception for changes in ownership in banks that have been lined up for privatisation, the Times of India has reported.

The report quoting sources said that the RBI would issue comprehensive norms that will also deal with corporate ownership of lenders. It further said that there are sharp differences on allowing corporate firms into the banking sector.

Bank privatisation

The central government and the RBI have agreed on the legislative changes needed for privatisation of banks. IDBI Bank is first in the list of three state-owned banks lined up for privatisation.

According to the Times of India Indian Overseas Bank and Central Bank of India are the other two. The report said Niti Aayog has shortlisted these three but a core group of secretaries will take a final decision on the matter.

An RBI working group RBI had submitted a new licensing policy for banks. The central bank is, however, yet to take a call on it. Privatisation of banks is not expected anytime soon because a clarity has not emerged on shareholding patterns. Bidders would want to know the eligibility conditions and how much they can buy and how they need to dilute.

Corporate interest

Many corporate entities are keen on entering the banking arena but the present rules do not allow them to enter the sector. The report noted that many big corporate firms such as the Tatas and Birlas have a large presence in the financial services segment and may be keen on either acquiring a stake or setting up a bank in future.