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New RBI norms might force banks to reduce their holdings, change business models
Synopsis
The new draft norms mean that NBFCs owned by banks like HDB Financial Services Ltd is by HDFC Bank cannot continue as a wholly owned subsidiary or will have to choose entirely new businesses.
MUMBAI: Banks with financial subsidiaries like insurance, mutual funds or NBFCs may have to reduce their holdings or move to a non operating financial holding company (NOFHC) model to be compliant with new rules by a five member internal working group (IWG) of the Reserve Bank of India (RBI) which caps stakes by banks at 20%.Further, the PK Mohanty led group which was formed in June, has suggested that a bank and its existing
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