Discussion paper on holding structure for banks awaits release
By Vaibhav Aggarwal
Aug 13, 2010
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Another discussion paper is likely to be released by Reserve Bank of India regarding the holding company structure for banks. The new discussion paper is expected to come in the next few months. RBI has recently released the first discussion paper on guidelines for issuing fresh bank licenses. The apex bank seems to be bringing down the number of new entrants getting entry into the banking domain.

The major issue which would envelop the discussion paper is the holding structure of the largest bank in the country, State Bank of India. SBI has five associate banks and a pool of subsidiaries under its umbrella.

The issue that will be presented in the discussion paper is whether SBI should directly bear stakes of its associate banks or should incorporate a holding company to which it will transfer all its stakes in the associate banks.

Uday Kotak, MD of Kotak Mahindra Bank, said "RBI appears to have foreclosed on only two issues - companies engaged in real estate and on foreign holding. Holding companies might be the subject of another discussion."

The topic of holding company structure was considered by RBI last in 2007 on a discussion paper.


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