The Ministry of Finance has notified the grant of an exemption to Indian Bank from the provisions of Section 19(2) of the Banking Regulation Act, 1949, allowing it to hold shares in excess of the statutory limit in ASREC (India) Limited.
Section 19(2) of the Banking Regulation Act, 1949 ordinarily restricts banking companies from holding shares in any company — whether as pledgee, mortgagee, or absolute owner — beyond 30% of either the paid-up share capital of the investee company or the bank’s own paid-up capital and reserves, whichever is lower. The provision is designed to prevent excessive exposure and potential risk concentration in a single entity, thereby ensuring prudent banking practices.
However, invoking its powers under Section 53(1) of the Banking Regulation Act, 1949, and acting upon the recommendation of the Reserve Bank of India (RBI), the Central Government has issued a special notification exempting Indian Bank from this restriction specifically with regard to its shareholding in ASREC (India) Limited. This exemption permits Indian Bank to continue holding shares in ASREC that exceed the statutory cap outlined under Section 19(2).
ASREC (India) Limited, a prominent asset reconstruction company, plays a key role in the financial ecosystem by acquiring and resolving stressed assets. Indian Bank’s increased stake is seen as a strategic move, potentially enhancing the bank’s ability to participate more actively in the distressed asset market.
Notification Details
F. No. 7/11/2022-BOA.I]
Date: 14th May, 2025
