RBI Gives Banks Flexibility For Equity Investment

To give more operational freedom and flexibility in decision making, the Reserve Bank of India (RBI), on September 16, 2015, issued a circular stating that the banks need not approach RBI for prior approval for equity investments.

As per previous circulars of RBI, banks were not allowed to participate in the equity of financial services ventures including stock exchanges, depositories, etc., without obtaining the prior specific approval of RBI, notwithstanding the fact that such investments may be within the ceiling prescribed under Section 19(2) of the Banking Regulation Act.

Such investments are already subject to prudential limits as per Master Circular on 'Para Banking Activities', dated July 1, 2015, viz.,