BANKS’ SHARE HOLDERS AND THEIR RIGHTS :

As per the Banking Regulation Act, there is no specified limit on the number of shares to be held by a shareholder in a banking company. While there is no restriction on the holding of number of shares, but as far as the voting rights is concerned, no shareholder can exercise voting rights in respect of the shares held by him/her in excess of ten per cent of the total voting rights of all the shareholders of the banking company. However this provision does not in any way affect the transfer of shares or the registration of such share transfers.

The Reserve Bank of India has directed banking companies that whenever they receive more than the prescribed percentage of share transfer to one shareholder/party, the Board of the bank should refer to the Reserve Bank. Without the Reserve Bank’s acknowledgement/instructions, the Board cannot transfer such shares to a shareholder/ party. This is to ensure that the controlling interest in a banking company is not changed without the knowledge and approval of the Reserve Bank.