India plans to maintain voting rights ceilings for major shareholders of domestic banks, signaling that financial sector reforms will remain muted.
Concerns remain about excessive control. Under current rules, a single shareholder cannot own more than 26% of the voting rights in a private bank, even if his ownership is greater than that. For state-owned banks, that limit is 10%. India’s federal finance ministry and RBI discussed raising the limit on voting rights to give large shareholders more control over strategic decisions, but decided against it to avoid excessive scrutiny, the first source said. The Indian government wants certain safeguards, such as a 26% voting limit for a single shareholder, to remain in place to prevent individual decision-making, the first source said. The sources declined to be identified because the discussions are private. India’s finance ministry and the RBI did not immediately respond to Reuters emails seeking comment.
The ceiling could deter investment. The plan to maintain a cap on voting rights could deter major investors from acquiring controlling stakes in Indian banks at a time when foreign interest is high. India has seen two rare cross-border banking transactions this year, including Dubai-based Emirates NBD’s purchase of a 60% stake in RBL Bank and Japan’s Sumitomo Mitsui Banking Corp’s investment in YES Bank. The government is also looking for a majority investor in state-owned IDBI Bank, and expects to complete that process by the end of March 2026. There is strong interest from foreign investors in Indian banks, both sources said. If investors decide to reduce their shareholdings, their holdings could be picked up by others, the second source said, signaling confidence that enforcing voting limits will not cause problems.
Published on November 6, 2025
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