Private sector banks are set to get some relief from the Reserve Bank of India (RBI) on promoters stake. The regulator had earlier asked these banks to submit a road map and give a time frame for paring promoters shareholding to 10 per cent.
But, the central bank is now in favour of increasing that limit to 15 per cent, according to sources in the RBI. The move comes after the draft guidelines for new banking licences proposed that promoters of new banks float a non-operative holding company (NOHC), which would hold 40 per cent of the paid-up capital of the bank for an initial period of five years. It will then have to reduce its stake in the bank to 20 per cent within 10 years and 15 per cent within 12 years from the date of licensing.
The plan to allow existing bank promoters to hold 15 per cent stake will ensure a level playing field for all the players, a top official of a private sector bank, who did not wish to be named, said.
This will offer some comfort to private lenders such as Development Credit Bank (DCB), IndusInd Bank, Kotak Mahindra Bank and YES Bank, where promoters shareholding continues to be high.
According to another private bank 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 RBI on promoters shareholding before reducing stake further, he said.
The RBI had earlier expressed concern over high promoter shareholding in many private sector banks, though most of these lenders had completed 10 years of operations.
For instance, in IndusInd Bank, which commenced operations in 1994, promoters hold 19.53 per cent stake, while in DCB, which was converted into a scheduled commercial bank in 1995, promoters shareholding is 23.08 per cent.
Promoters of YES Bank, the youngest bank in the country which began operations in 2003, currently hold 26.5 per cent stake. In case of Kotak Mahindra Bank, the promoter shareholding is 45.5 per cent.
However, sources indicate that for HDFC Bank, the second-largest private sector bank in the country, the cap on promoters shareholding will not be applicable, as its promoter Housing Development Finance Corporation (HDFC), is a publicly held company. The promoters of HDFC Bank currently have 23.28 per cent stake in the bank.