IBA
“Even with a 33% or 26% holding, the government will be the single largest shareholder, thereby giving it total control,” said IBA chief executive HN Sinor. However, if that happens, the government will lose the right of appointment, which will rest with the Reserve Bank of India (RBI) thereafter, he clarified. Government control would also be ensured by the fact that RBI rules do not permit any bank to hold more than 5% equity in another.
Keeping in mind the rising competition and diversification of banking services, banks have been exploring various capital-raising options. Major players like ICICI Bank have been looking at different models, however, the most affected are public sector banks, which have a borderline government holding of 51%, and have no further headroom for raising capital.
