Latest news with #BankingRegulationAct
Yahoo
2 days ago
- Business
- Yahoo
Reserve Bank of India governor rules out issuance of banking licences to corporates
The Reserve Bank of India (RBI) governor Sanjay Malhotra has ruled out granting banking licences to corporate entities or their non-banking financial companies, citing an inherent conflict of interest that could endanger public deposits. Malhotra clarified that no proposals are under consideration to allow corporates into banking, emphasising the importance of separating banking operations from corporate ownership to maintain trust and protect depositor funds. Speaking at a fireside chat hosted by The Financial Express, he also addressed promoter holdings in private sector banks, stating that the RBI has no plans to revise the 26% voting rights cap outlined in the Banking Regulation Act, as it promotes diversified ownership for effective checks and balances. However, he noted that foreign banks can hold up to 100% ownership, provided they comply with regulatory approvals and norms. On corporate governance, Malhotra stressed that bank boards bear the ultimate responsibility for operations. "The board cannot be held responsible for each and every misdemeanour or episode,' he was quoted as saying by The Times of India, adding boards must "be vigilant and ensure that the money that the depositors, many of them small, have entrusted with them is kept safe.' Additionally, he highlighted the RBI's efforts to promote the international use of the Indian rupee through trade settlement and currency agreements. He outlined operational arrangements already in place with countries like the UAE and ongoing discussions with others, such as the Maldives. Meanwhile, earlier this month, the Indian apex bank issued an advisory to banks for the integration of the Financial Fraud Risk Indicator, a tool developed by the Department of Telecom (DoT), to reduce online financial frauds. "Reserve Bank of India governor rules out issuance of banking licences to corporates" was originally created and published by Retail Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Time of India
4 days ago
- Business
- Time of India
RBI governor rules out banking licences for corporates
MUMBAI: There is no proposal to allow corporates - either directly or through NBFCs - to obtain banking licences, RBI governor Sanjay Malhotra said on Friday, citing "an inherent conflict of interest with a group actually dealing with the money of the depositors". He said the monetary policy committee's neutral stance gives it room to move interest rates "up, down or pause". Malhotra said future rate decisions will be "data driven more on the outlook," particularly for inflation and growth. "Inflation has come down to about 2.1%, but monetary policy is forward looking, guided more by the outlook 6 to 12 months ahead. These are difficult decisions. Earlier projections had Q4 at 4.4%, though actual numbers for Q1 came in lower, so Q4 may be revised downward. Policy, being data driven and based on the outlook, will be guided by revised numbers, if any," he said, while speaking at a fireside chat in an event organised by Financial Express here. On promoter shareholding in private banks, Malhotra said the 26% limit on voting rights is laid down under the Banking Regulation Act. "There is no proposal to review this 26% shareholding," he said. RBI supports "diversification of ownership so that there are checks and balances within the owners, which we feel is necessary." He added that foreign banks may hold up to 100%, subject to conditions. On governance, Malhotra said the ultimate responsibility for a bank's operations lies with its board, though boards cannot be held accountable for every lapse. "The ultimate responsibility lies with the board," he said. At the same time, "the board cannot be held responsible for each and every misdemeanour or episode", Malhotra said. Boards must "be vigilant and ensure that the money that the depositors, many of them small, have entrusted with them is kept safe". Malhotra said RBI is accelerating efforts to internationalise the rupee through trade settlements and currency agreements with several countries, even as talk of a common BRICS currency remains aspirational. Operational arrangements are in place with countries like the UAE, while discussions are ongoing with others. "We are in talks with Maldives, we have an MoU with them, and similarly quite a few other countries," he said. On a BRICS currency, he said, "As of now, there is not much work happening on it." Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
5 days ago
- Business
- Time of India
RBI governor rules out bank licence for corporates
Mumbai: RBI governor Sanjay Malhotra said there is no proposal to allow corporates, either through NBFCs or directly, to obtain banking licences. 'There is no proposal as of now to allow corporates, whether through NBFCs or as a individual company to get a banking license,' he said, citing 'an inherent conflict of interest with a group actually dealing with the money of the depositors. ' On promoter shareholding in private banks, Malhotra said the 26% limit on voting rights is laid down under the Banking Regulation Act. 'There is no proposal to review this 26% shareholding,' he said. The RBI supports 'diversification of ownership so that there are checks and balances within the owners, which we feel is necessary.' He added that foreign banks may take up to 100%, subject to conditions. He was speaking during a fireside chat at an event in Mumbai. The RBI has long opposed the entry of large corporate houses into banking, citing risks related to governance failures, connected lending, and excessive influence. Its stance draws on global norms and past episodes in India where similar conflicts contributed to bank failures. The Govt has broadly supported the RBI's cautious view, preferring to keep banking ownership dispersed and independent of industrial groups. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Emergency Generators in Adis Abeba: (Prices May Surprise You) Emergency Generator | Search Ads Search Now Undo Proposals from industry bodies to open up the sector have consistently failed to gain traction, with policymakers emphasizing regulatory prudence and financial stability. Economists and commentators have consistently warned against allowing corporate-owned banks. They argue that such ownership structures increase the risk of crony capitalism and weaken credit discipline. Reports like the 2014 Nachiket Mor Committee and the 2020 internal working group discussed the idea, with the latter controversially recommending cautious entry for corporates. However, these suggestions faced immediate criticism from academics and the public, who said India's regulatory framework may not be equipped to manage the risks involved. The RBI's insistence on limiting promoter voting rights to 26% reinforces its intent to keep control fragmented. While foreign banks may hold larger stakes, domestic owners face stricter caps to reduce concentration and ensure effective oversight. The approach reflects a broader aim of maintaining depositor confidence and system integrity. Despite recurring calls for reform, neither the RBI nor the Govt has shown willingness to ease restrictions on corporate entry into banking. With the RBI reiterating its position, the door remains closed to business conglomerates seeking banking licences. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
6 days ago
- Business
- Mint
RBI cancels Karnataka-based Karwar Urban Co-operative Bank's licence over earnings prospect
India's banking regulator, the Reserve Bank of India (RBI), on Wednesday, 23 July 2025, cancelled the licence of the Karnataka-based Karwar Urban Co-operative Bank due to the institutional lender's lack of earning prospects. 'The Reserve Bank of India (RBI), vide order dated July 22, 2025, has cancelled the licence of The Karwar Urban Co-operative Bank Ltd., Karwar. Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 23, 2025,' said the RBI. As per the announcement, the Karwar Urban Co-operative Bank will cease to conduct banking business effective the end of business hours on Wednesday, 23 July 2025. The central bank also flagged that the Karwar Urban Co-operative Bank does not have adequate capital to comply with the provisions of the Banking Regulation Act of 1949. 'The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949,' said RBI in an official release. RBI has also requested the Registrar of Cooperative Societies, Karnataka, to issue an order for winding up the bank and appoint a liquidator for the institutional lender. Depositors who have parked their money in the Karwar Urban Co-operative Bank will be entitled to receive an insurance claim deposit of up to ₹ 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). 'The bank with its present financial position would be unable to pay its present depositors in full,' according to the RBI release. The RBI data also showed that 92.9% of the co-operative bank's depositors are entitled to receive the full amount of their deposits from DICGC. 'As on 30 June 2025, the DICGC has already paid ₹ 37.79 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961, based on the willingness received from the concerned depositors of the bank,' said the Reserve Bank of India (RBI) in its official release. RBI also highlighted that, given the current situation of the institutional lender, they have taken the decision to bar the licence of the bank in the matter of public interest. 'Public interest would be adversely affected if the bank is allowed to carry on its banking business any further,' said the banking regulator in the official statement.
News18
7 days ago
- Business
- News18
Chanda Kochhar-Videocon Scam: Inside The Rs 3,250 Cr Loan And Rs 64 Cr Bribery
Last Updated: Appellate Tribunal has found Chanda Kochhar guilty of accepting a Rs 64 cr bribe for sanctioning a Rs 300 cr loan to Videocon; Here's what happened Chanda Kochhar-Videocon Case: The ICICI Bank–Videocon loan fraud case took a decisive turn in July 2025 after the PMLA Appellate Tribunal held Chanda Kochhar, former MD and CEO of ICICI Bank, guilty of accepting a Rs 64 crore bribe in exchange for approving a Rs 300 crore loan to the Videocon Group. The ruling upheld charges filed by the Enforcement Directorate (ED), calling it a 'clear case of quid pro quo." The case traces back to allegations by the Central Bureau of Investigation (CBI) that ICICI Bank, under Kochhar's leadership, sanctioned loans totalling Rs 3,250 crore to Videocon Group firms promoted by Venugopal Dhoot. These sanctions allegedly violated the Banking Regulation Act, RBI norms, and ICICI's own internal credit policies. Among the disbursals, a pivotal transaction took place in September 2009 when ICICI Bank sanctioned Rs 300 crore to Videocon International Electronics Ltd (VIEL), a group subsidiary. Just one day later, Rs 64 crore was transferred from Supreme Energy Pvt Ltd (a Videocon-linked firm) to NuPower Renewables Pvt Ltd, a company effectively controlled by Chanda Kochhar's husband, Deepak Kochhar. The case spotlighted deeper issues of conflict of interest and corporate governance lapses, as Chanda Kochhar failed to disclose her husband's links to Videocon during her participation in loan sanctioning decisions. Early Red Flags & Chanda Kochhar's Exit Red flags were raised as early as 2016 by whistleblowers and media reports, which pointed to potential conflicts of interest in the ICICI-Videocon dealings. Following mounting scrutiny, the CBI launched a preliminary probe in March 2018. Kochhar resigned from her post in October 2018, citing personal reasons, but her exit coincided with growing internal and regulatory investigations. These probes sought to determine if she had breached ICICI Bank's code of conduct by concealing personal financial links that could influence lending decisions. FIR, ED Probe, and Asset Attachments The case intensified in January 2019 when the CBI filed a formal FIR against Chanda Kochhar, Deepak Kochhar, and Venugopal Dhoot, alleging criminal conspiracy, cheating, and misuse of official position under the IPC and the Prevention of Corruption Act. The Enforcement Directorate followed suit with a money laundering probe and provisionally attached Rs 78 crore worth of assets belonging to the Kochhars. However, in November 2020, the PMLA Adjudicating Authority ordered the release of these assets, stating the ED had not established a direct link between the funds and criminal activity at that point. In December 2022, the CBI arrested Chanda Kochhar, Deepak Kochhar, and Venugopal Dhoot, claiming to have conclusive evidence linking them to the illicit transactions. A month later, the Bombay High Court granted interim bail to the Kochhars, slamming the arrests as 'arbitrary" and lacking procedural rigour. The court criticised the CBI for making routine arrests 'without application of mind." The case regained national attention in September 2024 when the Supreme Court issued notices to Chanda and Deepak Kochhar in response to a CBI plea. The CBI challenged the interim bail, arguing that the Kochhars' release could hinder ongoing investigations. The ED, too, reiterated its stance before the Appellate Tribunal, emphasising the structured nature of the fund transfers and Kochhar's conflict of interest. July 2025 Tribunal Verdict: Bribery and Ethics Violation Confirmed On July 3, 2025, the PMLA Appellate Tribunal overturned the 2020 ruling and ruled in favour of the ED. The tribunal concluded that Chanda Kochhar was guilty of accepting a Rs 64 crore bribe in return for approving the Rs 300 crore loan to Videocon. It rejected claims that the payment to NuPower was a legitimate business transaction and called it a bribe, routed through Supreme Energy and NuPower, which was controlled by Deepak Kochhar. The tribunal emphasised that Chanda Kochhar, as a member of ICICI's credit committee, had a fiduciary duty to disclose any conflict of interest—something she failed to do. Citing evidence recorded under Section 50 of the PMLA Act, the tribunal also ruled that the earlier adjudicating authority had overlooked material facts and erred in releasing the attached assets. tags : chanda kochhar case view comments Location : New Delhi, India, India First Published: July 23, 2025, 08:30 IST News business » banking-finance Chanda Kochhar-Videocon Scam: Inside The Rs 3,250 Cr Loan And Rs 64 Cr Bribery Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
