Corporates will not be able to own banks. The Reserve Bank of India (RBI) is not considering any proposal to allow corporates, either directly or through their non-banking financial companies (NBFCs), to obtain banking licences,  Governor Sanjay Malhotra said.

The reason behind this is an “inherent conflict of interest” as the group will actually deal with depositors’ money, Malhotra explained while speaking at an event in Mumbai organised by Financial Express.

Corporates, however, could have equity ownership up to 10% without control in a bank. 

Regarding promoter shareholding in private banks, Malhotra said the 26% cap on voting rights is laid down under the Banking Regulation Act. There is no proposal to review this, he added.

Diversification of ownership leads to checks and balances within them, which the RBI feels is necessary.

Foreign banks may hold up to 100%, he added, but this is subject to conditions.