Losing licence bid no bar for stake buy in a bank: RBI

Tags: News
An entity's failed attempt at getting a bank licence will not have any bearing on its move to pick up a large share-holding in an existing bank, newly-appointed RBI Deputy Governor R Gandhi said today.

His comments come against the backdrop of reports that L&T Finance is eyeing a significant stake in private sector lender Yes Bank.

"They might be rejected for bank licence, but as a share- holder if they are going to come, we will examine that. It won't be a bar just because its (banking) licence has been rejected," he told reporters on the sidelines of an IMC event here, without naming L&F Finance.

Gandhi, who got promoted as Deputy Governor last month, was replying to a question as to whether an NBFC, which might have failed to secure a banking licence in the last round, will be eligible for picking a stake in a bank.

The Deputy Governor, in-charge of banking operations and development, said that anybody looking to have over 5 per cent stake in an existing bank has to get an approval from the Reserve Bank, which will look at the merits of the case.

"We will look at the fit and proper (criteria); normal due diligence will be applied and based on that, decisions will be taken. It is not that we are pro or against a particular group or a company," Gandhi added.

Some media reports last month had said L&T Finance, the financial services arm of the engineering giant Larsen & Tubro, is looking at either picking up promoter's stake in Yes Bank or merging with it.

Yes bank is caught up in a legal battle with one of its promoters and current MD Rana Kapoor and the other promoter's widow Madu Kapur, over board nominations.

While Kapoor holds a little over 13 per cent in the bank, Madhu has close to 12 per cent stake in the bank.

L&T Finance had failed to make the cut in the latest round of licencing where IDFC and MFI player Bandhan were granted in-principle nod to set up banks.

Therefore, some critics have termed L&T Finance's bid to buyout or pick some stake in Yes Bank as "backdoor entry" into the banking sector.

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