Section 12(2) of the Banking Regulation Act, 1949 limits

Solution

Section 12(2), as amended by the Banking Regulation (Amendment) Act, 1994 and the Banking Laws (Amendment) Act, 2012, provides that no person holding shares in a banking company shall exercise voting rights on poll in excess of ten per cent of the total voting rights of all the shareholders. The proviso, inserted by Act 4 of 2013 with effect from 18 January 2013, empowers the Reserve Bank to increase this ceiling in a phased manner from ten per cent to twenty-six per cent. The historical evolution was from one per cent (original) to five per cent, then to ten per cent (1994), with the 2013 proviso now permitting RBI to allow up to twenty-six per cent. This graduated framework balances investor rights with the need to prevent concentration of control in banking institutions.