Pvt banks need RBI nod for fund-raising

The RBI, in a notification, said these instructions comes into force with immediate effect and banks need to approach the apex bank along with details of the issue once the bank’s board clears the proposal of raising capital through QIP route.

Allotment to investors

Further, allotment to the investors would be subject to compliance with Sebi guidelines on QIPs and RBI guidelines dated February 3, 2004 on acknowledgement of allotment or transfer of shares. Once the allotment process is complete, the banks would also be required to furnish complete details of the issue in the enclosed format for seeking post facto approval, irrespective of such an acquisition results in shareholding of 5 per cent or more, of the paid up capital of the bank, it added. In case of pricing of issues where clearance from the banking regulator is not required, then it should be as per Sebi guidelines and in cases where prior RBI nod is required, then the pricing should take into account both Sebi and RBI guidelines, the notification added.

RBI also said that all banks in private sector were required to obtain its approval for issue of shares through Initial Public Offers (IPOs) and preferential issues in accordance with the revised guidelines.

Simply put, all private banks should obtain RBI nod for IPOs and after the listing on the stock exchanges, they are free to price their subsequent issues.

On rights issue, RBI clearance was a requisite by both listed and unlisted banks, but they need to comply with the requirements which have been laid down in the circular dated June 25, 2005. Similarly for bonus issue, private banks – both listed and unlisted –, need not seek RBI nod but they would be subject to Sebi’s requirements. In respect of ‘preferential issue’, it said RBI nod was required.

‘Will not allow overheating’

New Delhi, PTI: The RBI, on Wednesday, said it is vigilant to the possibility of overheating in the economy and will do everything to prevent such an occurrence.
“We are alert to the possibility of persistent high inflation due to supply shortages  and we will do everything possible to prevent that,” RBI Governor D Subbarao said, adding that the approach to prevent overheating in the economy is to act on the supply side.