The Reserve Bank of India on October 1 finalised a simpler framework for major shareholding in banks, allowing eligible mutual funds, insurers and pension funds to secure a single one-time approval for subsequent acquisitions of up to 10 percent in the same bank.
What changes
Under the earlier framework, an investor whose holding fell below the 5 percent threshold after an initial major acquisition had to return to the central bank for fresh approval before crossing the line again. That friction is now gone: a one-time approval covers later purchases up to the 10 percent cap.
Prior RBI approval remains mandatory for the initial acquisition of a major stake. The rules, effective immediately, apply to commercial banks as well as small finance, payments and local area banks. Applications are filed through the RBI's PRAVAAH portal, and investors must report holdings that move below or above the 5 percent mark within three working days.
Why it matters
The change reduces compliance paperwork for large institutional investors building positions in Indian banks, and it formalises a proposal the RBI had floated in July. With foreign and domestic institutions deepening their exposure to Indian financial stocks, the streamlined route is expected to make stake-building in banks a smoother process while keeping the central bank's gatekeeping intact on first entry.
Sources: ET BFSI via ANI, Oct 1, 2026 — https://bfsi.economictimes.indiatim...-mfs-insurers-for-holdings-up-to-10/134620922
What changes
Under the earlier framework, an investor whose holding fell below the 5 percent threshold after an initial major acquisition had to return to the central bank for fresh approval before crossing the line again. That friction is now gone: a one-time approval covers later purchases up to the 10 percent cap.
Prior RBI approval remains mandatory for the initial acquisition of a major stake. The rules, effective immediately, apply to commercial banks as well as small finance, payments and local area banks. Applications are filed through the RBI's PRAVAAH portal, and investors must report holdings that move below or above the 5 percent mark within three working days.
Why it matters
The change reduces compliance paperwork for large institutional investors building positions in Indian banks, and it formalises a proposal the RBI had floated in July. With foreign and domestic institutions deepening their exposure to Indian financial stocks, the streamlined route is expected to make stake-building in banks a smoother process while keeping the central bank's gatekeeping intact on first entry.
Sources: ET BFSI via ANI, Oct 1, 2026 — https://bfsi.economictimes.indiatim...-mfs-insurers-for-holdings-up-to-10/134620922