Easing the rules for investment by banks in financial services ventures, India's central bank on Wednesday said lenders need not seek its prior sanction if their capital risk-weighted asset ratio (CRAR) is 10 or more.
The Reserve Bank of India (RBI) also said that the banks, apart from satisfying the CRAR stipulation, should have reported net profit during the previous fiscal.
According to RBI, the move is to give more operational freedom and flexibility to banks in decision making.
Prior permission of RBI is not needed in cases where after such investment, the holding of the bank remains less than 10 percent of the investee company's paid up capital, and the holding of the bank, along with its subsidiaries or joint ventures or entities continues to remain less than 20 percent of the investee company's paid up capital.
