FinMin exempts Indian Bank from Banking Regulations Act for exceeding Shareholding in ASREC (India) Limited [Read Notification]

The Ministry of Finance has announced a notification allowing Indian Bank a temporary exemption from certain provisions of the Banking Regulation Act, 1949. Specifically, the bank can now continue holding more than a 30% stake in ASREC (India) Limited until March 31, 2026. This decision comes following recommendations from the Reserve Bank of India (RBI).

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The exemption, detailed in Notification No. S.O. 2138(E), dated May 14, 2025, suspends the applicability of Section 19(2) of the Banking Regulation Act for Indian Bank. Usually, Section 19(2) restricts banks from holding shares exceeding 30% of a company's paid-up capital.

Exemption Recipient: Indian Bank

Affected Stakeholding: ASREC (India) Limited

Regulation Exempted: Section 19(2), Banking Regulation Act, 1949

Exemption Validity: Until March 31, 2026

Effective From: Date of publication in the Official Gazette

Section 19(2) typically restricts banks from owning over 30% shares in any company (except subsidiaries). However, Section 53(1) allows the central government, after consulting with RBI, to grant specific exemptions if they serve public or strategic interests.

ASREC (India) is a prominent entity in the asset reconstruction sector, dedicated to resolving non-performing assets (NPAs). Indian Bank's significant stake in ASREC aligns with its objective of improving asset recovery and resolution processes.

This exemption provides Indian Bank with strategic flexibility, enabling it to maintain influential control in ASREC without immediate regulatory pressure to reduce its holding. The extended exemption until March 2026 gives the bank sufficient time to manage its investment strategically.

The decision by the Ministry of Finance demonstrates government support for public sector banks and their critical investments in asset reconstruction firms.

To Read the full text of the Notification CLICK HERE

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