The Reserve Bank of India has allowed foreign banks higher shareholding in private sector lenders in the country under exceptional situations as it tweaked the guidelines, against the backdrop of norms on licensing of new banks. With the changes, regulated, well-diversified, listed and government-run foreign financial institutions will be allowed to own as much as 40 percent of a private sector bank.
The ownership of non-regulated and non-diversified financial institutions will be capped at 15 percent, the RBI said in a document posted on its website on Thursday. Foreign banks operating in India can continue to acquire up to 10 percent of the investee bank's equity capital but in exceptional circumstances such as restructuring or weak banks or in the interest of consolidation in the banking sector, the RBI may permit a higher level of shareholding, it said.