The Reserve Bank of India has opened a one-time approval route for certain institutional investors to hold a major shareholding in a bank, according to a Corplawupdates summary of four amendment directions dated 1 October 2026. The directions amend the Acquisition and Holding of Shares or Voting Rights Directions, 2025 for commercial banks, small finance banks, payments banks and local area banks, and take effect immediately. Spectate Media has not seen the directions themselves.
Who qualifies
A qualifying person must be a SEBI-registered mutual fund, a PFRDA-registered pension fund or an IRDAI-registered insurance company, and must not belong to the promoter group of the bank. For commercial banks the exclusion also covers the bank's group. First-time acquisition of a major shareholding still needs prior RBI approval.
The limits
The one-time approval can cover up to 10% of paid-up share capital or voting rights, counted on an aggregate basis. The RBI may grant it at its discretion, and it can be revoked if its terms are broken or if the holder or an associated person is later found not fit and proper. Applications go through the RBI's PRAVAAH portal with a Form A declaration, and the bank gives its comments in Form A1.
Reporting
A holder must report to the RBI and the bank within three working days when its stake falls below, or rises above, 5% of paid-up share capital or voting rights. The directions also add an explanation for portfolio managers: a client's acquisition is not treated as the manager's indirect acquisition if the client is the registered owner with voting rights, the manager gives only non-binding advice and any voting rests on a specific client mandate.
What the summary leaves open
It says the text does not state whether the route applies to holdings that fell below 5% before 1 October, sets no application deadline and does not define "collectively" or "aggregate basis". The RBI released a draft on 14 July 2026 and took comments until 4 August.
Key numbers
- One-time approval ceiling: Up to 10% (Of paid-up capital or voting rights)
- Reporting trigger: 5% (Above or below)
- Reporting deadline: 3 working days (To RBI and the bank)
- Draft released: 14 July 2026 (Comments until 4 August)
What boards and CFOs should note
Three points stand out. First, eligible funds and insurers now have a defined route to hold more than 5% of a bank. Second, banks must provide comments on any application. Third, the 5% reporting trigger and three-day deadline apply to approved holders.
Source: Corplawupdates, 1 October 2026. This is a summary of a news report, published as general information. It is not legal, tax or investment advice.
This article is journalism and commentary. It is not a recommendation to buy or sell any security, and it is not professional advice. Read the full disclaimer.
