Next on the block is a 26% controlling stake in Centurion, an ailing private bank. ING has an insurance joint venture with Vysya. Its subsidiary, Bank Brussels Lambert ( BBL), owns 20% of Vysya, a private bank, and is seeking to buy out the core shareholders of the bank. The first foreign bank to test the new rule will be ING Barings, a Dutch bank. This limit has forced core shareholders in private banks to scatter their holdings among family or group companies.
The small print, however, still managed to sap initial euphoria: it contains a proviso that no entity may have more than 10% of the voting rights in a private bank.
And a rule that barred foreign banks with branches in India from buying into local banks has been abolished. The threshold for total foreign portfolio investment in a bank may also have been raised to 49%, from 24% (the finance ministry has yet to confirm this). Foreign banks may now directly acquire up to 49% of a private Indian bank before, the limit was just 20%. CHANCES of consolidation amongst India's privately-owned banks rose after investment rules for foreign banks were eased on February 16th.
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