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FDI: Entry and ownership rule
On 22 February 2013, the Reserve Bank of India published the guidelines for "Licensing of New Banks in the Private Sector". The new rules restrict foreign ownership in such banks.
Foreign shareholding in private sector banks, which was allowed up to 74% of the paid-up voting equity capital, will now be limited to 49% for the first five years from the date of licensing of the bank. The 74% limit will apply after the expiration of this period.
Further, no non-resident shareholder is permitted to hold more than 5% of the paid-up voting equity capital for the first 5 years from the date of commencement of business by the bank.
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