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ARTICLE · 09 FEBRUARY 2023

RBI Introduces Master Directions For Regulating Major Shareholding In Banking Companies

Khaitan & Co.
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In this Ergo, we will analyse certain salient features of the revised framework with a specific focus on the acquisition of shareholding in a banking company, as introduced by the Directions.

IndiaFinance and Banking
Prashanth Ramdas
Prashanth Ramdas
Rahul Chakraborti
Rahul Chakraborti
Ashwij Ramaiah
Ashwij Ramaiah
Vijay Sekar
Vijay Sekar
Author LinkedIn connections

On 16 January 2023, the Reserve Bank of India (RBI) issued the: (a) Reserve Bank of India (Acquisition and Holding of Shares of Voting in Banking Companies) Directions, 2023 (Master Directions) read with the Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies (Guidelines) with the twin objectives of ensuring that: (i) the ultimate ownership and control of banking companies are well diversified; and (ii) the major shareholders of banking companies are 'fit and proper' on a continuing basis (Twin Objectives).

The Master Directions and the Guidelines (together, "Directions") lay down the legal framework in relation to the manner of acquisition of shareholding / voting rights in banking companies and the various legal compliances required to be followed by the concerned acquirer and the banking company, prior to and pursuant to the acquisition of such shareholding in the banking company. Additionally, the framework also

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