Foreign Ownership in Banks to Remain at 15% for Now, says RBI Governor

As India’s financial sector grows to meet rising economic demands, the Reserve Bank of India (RBI) is re-evaluating its policies on ownership norms for banks. RBI Governor Sanjay Malhotra confirmed this review but ruled out any immediate changes to the existing foreign investment limits. The comments were made during the monetary policy press briefing on June 7.

Foreign Ownership Norms Remain Unchanged

Malhotra stated that the current policy allows non-residents to hold up to 15% in private sector banks, with exceptions considered on a case-by-case basis. “We allow 15% for non-residents, and it can go up above 15% on a case-by-case basis. There is no change in this anytime soon or immediately,” the RBI Governor told reporters at the RBI headquarters in Mumbai.

He further clarified that while discussions are taking place to potentially revise ownership guidelines, any such move would require time. "It will not happen immediately, it will take time.”

Need for More Banks With Credible Ownership

Malhotra highlighted the growing need for robust banking institutions in line with India’s economic progress. “Certainly, our economy is growing, we require more banks. Keeping that in mind, if there is a need for change in the ownership criteria, we will do it,” he added.

He stressed the importance of having reliable and trustworthy ownership at the helm, which would ensure that any expansion of the banking sector is aligned with long-term stability and confidence in the system.

Read More: After RBI’s Rate Cut, These 4 Public Sector Banks Cut Lending Rate!

Conclusion

The RBI has initiated a thoughtful review of bank licensing and ownership structures, particularly concerning foreign holdings. However, there is no immediate relaxation of the foreign ownership limit is planned. Any future amendments will be made in a calibrated manner, focusing on economic requirements and institutional trustworthiness.

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