RBI’s New Banking Proposals: Who Stands To Benefit?

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Proposals from an internal working group of the Reserve Bank of India to permit corporate entry into banking, permit promoters to hold on to a higher stake, and allow large NBFCs to convert into banks could have implications for a wide range of entities.

Brokerage houses believe that while it may take time for corporate-promoted banks to be set up, some of the other proposals could take effect relatively sooner.

Macquarie Securities

  • At a time when bank failures are increasing in India, the decision to distribute licences could be controversial. We expect RBI to exercise caution in this regard and hence some recommendations may not come to fruition.
  • We don’t believe industrial houses, even if they own NBFCs, will be allowed to open a bank or convert into a bank.
  • The cap on promoters’ stake in the long run (15 years) may be raised from the current level of 15% to 26% of the paid-up voting equity share capital of the bank. This would be positive for Kotak Mahindra Bank as it cements its 26% stake and positive for IndusInd Bank if promoters are allowed to raise stakes.
  • Banks currently under a NOFHC (non-operating financial holding company) structure may be allowed to exit from such a structure if they do not have other group entities in their fold. This could benefit Ujjivan Financial Services.

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