The Reserve Bank of India (RBI) has proposed amendments to simplify the approval process for institutional investors seeking to acquire or increase major shareholding in banks.
Under the draft Reserve Bank of India (Commercial Banks — Acquisition and Holding of Shares or Voting Rights) Amendment Directions, 2026, eligible mutual funds, insurance companies and pension funds would receive a one-time approval to re-acquire a major stake in a bank, even if their holdings fall below 5 per cent.
Currently, under the 2025 Master Direction, institutional investors whose stake drops below the 5 per cent threshold are required to obtain fresh RBI approval before increasing their holdings back to a major shareholding.
The proposed framework would eliminate the need for repeated approvals, allowing eligible institutions to increase their stake up to 10 per cent without seeking fresh regulatory clearance each time, provided they continue to comply with RBI regulations and the approval remains valid.
The move is aimed at reducing procedural requirements for long-term institutional investors while maintaining regulatory oversight of ownership in the banking sector.
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