In 1970, the Reserve Bank had issued directions to the banks requiring them to seek the Reserve Bank’s permission or acknowledgement before effecting any transfer of shares in favour of any person which would take the holding of shares to more than one per cent (subsequently raised to five per cent) of the total paid up capital of such banking company.
Since shares are acquired first and then lodged for registration, the Reserve Bank’s directions create a somewhat piquant situation. To plug the gap, a Bill has now been introduced in the Parliament relating to banking regulation.