Question

Under Section 19, a banking company can hold shares in any company as pledgee, mortgagee or absolute owner up to what limit of the paid-up capital of that company?

Q: Answer-Under Section 19, a banking company can hold shares in any company as pledgee, mortgagee or absolute...

Section 19 of the Banking Regulation Act restricts a banking company from holding shares in any company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding 30 of the paid-up share capital of that company or 30 of the banks own paid-up capital and reserves, whichever is less. This prevents excessive exposure of banks to corporate equity. The restriction protects depositors from concentration risk.