Bank takeover laws not clear
By One major area of concer | 12 Dec 2003
One major area of concern, according to RBI Governor Dr Y V Reddy, is the amalgamation of non-banking financial companies (NBFCs) with banks. In this case, the law does not impose any obligation on the part of either the bank or the NBFC to seek the RBI's approval before filing the scheme of amalgamation in the courts.
In
his inaugural address at the two-day Bank Economists'
Conference here, Reddy said: "As regards the legal
framework, the RBI is not very comfortable with the lack
of clear statutory provisions regarding takeover of management
of banks."
To
take care of these regulatory gaps, the RBI has proposed
amendments to the Banking Regulation Act, which include
the proposal that amalgamation of an NBFC with a banking
company will be on the lines of merger of two banking
companies with the RBI okay a must.