CB on bank stakes

The Central Bank is preparing a ‘clearer’ policy on shareholdings limits in commercial banks which are confined to 10 percent per individual or institution but can go up with the approval of the Monetary Board (MB).

Shareholdings are currently restricted to 10 percent per individual or institution but increased holdings are possible with special permission.

“The Attorney General is currently examining the proposal which explains in detail how the restrictions on shareholdings in banks would apply. We want to confine increased holding with permission to 15 percent and define exceptional circumstances when more than that is allowed,” Central Bank Governor Nivard Cabraal said.

He said the rule on shareholdings restrictions has been very vague and loosely used by banks to raise shareholdings. The governor said strict compliance of the 10 percent maximum will apply from next year with those who have more than 10 percent permitted a grace period of upto five years to shed their excess stocks.