Question

Under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, what is the restriction on shareholding by a company in a corresponding new bank (nationalised bank)?

Q: Answer-Under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, what is the restri...

The Banking Companies Acquisition and Transfer of Undertakings Act, 1970 provides that no company shall hold or acquire shares in a corresponding new bank such that its aggregate investment exceeds the percentage not being more than 20 of the paid-up capital as specified by the Central Government by notification in the Official Gazette. This restriction ensures that no single corporate entity can acquire a dominant stake in a nationalised bank. The Central Government holds a majority stake in all corresponding new banks established under this Act.

A No company can hold more than 10% of the paid-up capital of a corresponding new bank at any time

B No company can hold or acquire shares in a corresponding new bank such that its aggregate investment exceeds the percentage, not being more than 20% of the paid-up capital, as specified by the Central Government

C Foreign companies are prohibited entirely from holding any shares in corresponding new banks

D No individual or company can hold more than 5% of paid-up capital without prior approval from the RBI and Central Government

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