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The Presidents/Chief Executive Officers,
All Banks/DFIs
Dear Sir/Madam,
Regulation R-6 of Prudential Regulations for Corporate / Commercial Banking
- Please refer to BPRD Circular No. 06 of 2014 and Circular Letter No. 07 of 2021, whereby, revised Prudential Regulations for Corporate / Commercial Banking and subsequent amendments in Regulation R-6 of Prudential Regulations for Corporate / Commercial Banking were issued.
- It has been decided to revise Para 1 A of Regulation R-6 of Prudential Regulations for Corporate / Commercial Banking as under:
Para 1 A. Acquisition of Shares - Single Company Investment Limit:
(i) The investment of banks/DFIs, in aggregate, in shares of any single company shall be lower of the following two limits:
(a) 5 percent of Tier-I Capital of the bank/DFI reported in preceding half-yearly reviewed / annual audited financial statements; or,
(b) 10 percent of paid-up shares of Investee Company.
The above limits shall also be applicable to investment of banks/DFIs in units of all types of mutual funds.
(ii) The investment of banks/DFIs, in aggregate, in shares/units of any single startup (including Fintech Startups) or any single Real Estate Investment Trust (REIT) shall be lower of the following limits, respectively:
(a) Startups: 5 percent of Tier-I Capital of the bank/DFI reported in preceding half-yearly reviewed / annual audited financial statements or Rs. 500 million.
(b) REITs: 5 percent of Tier-I Capital of the bank/DFI reported in preceding half-yearly reviewed / annual audited financial statements or 15 percent of paid up shares of Investee Company.
(iii) The banks/DFIs shall have an approved policy incorporating therein an internal evaluation process for an objective analysis and assessment of their equity investment decisions, which must consider factors including, inter alia, financial standing of the bank/DFI, aggregate investment portfolio, risk appetite and expected return, level of expertise, business strategy including exit strategy etc.
3. All other instructions on the subject shall, however, remain unchanged.
4. Please acknowledge receipt.
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