Section 19(2) of the Banking Regulation Act, 1949 restricts a banking company from holding shares in any company, whether as pledgee, mortgagee or absolute owner. The holding must not exceed:

Section 19(2) provides that, save as permitted under sub-section (1), no banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty per cent of the paid-up share capital of that company or thirty per cent of its own paid-up share capital and reserves, whichever is less. The use of “whichever is less” makes the effective ceiling the lower of the two computations, tightening the restriction. The proviso grants a transitional window of up to two years to bring pre-existing holdings into conformity. The provision limits a bank’s exposure to equity concentration risk in any single company.