Emirates NBD has got permission from the Reserve Bank of India (RBI) to buy up to 74% stake in RBL Bank. Right now, RBL Bank doesn’t have a promoter (main owner), but after this deal, Emirates NBD will take that role. The RBI is giving some special relaxations to make this deal smoother. This will help the ownership of RBL Bank change without facing too many problems or delays.
There is one important rule in this deal. Even though Emirates NBD can buy up to 74% of the shares in RBL Bank, it can use only 26% of the voting power as per the law. This means that while it can invest a large amount of money and become the main owner, its power to make key decisions will be limited. It means they can own more but cannot fully control all decisions on their own.
Afer the dealRBL Bank will be treated like a foreign bank in India (since its parent company is from UAE). Emirates NBD will need to merge its existing India branches with RBL Bank within a year.
Some approvals are still needed before the deal is fully completed. The bank must get permission from the Securities and Exchange Board of India (SEBI) and also approval from the Government of India, since the foreign investment in this deal is more than 49%. These approvals are important to make sure everything follows the rules.
Overall, foreign banks are becoming more interested in India’s banking sector.
