The Ministry of Finance has issued a notification granting Indian Bank a temporary exemption under the Banking Regulation Act, 1949, allowing it to continue holding over 30% stake in ASREC (India) Limited until March 31, 2026. The move comes following a recommendation from the Reserve Bank of India (RBI).
As per Notification No. S.O. 2138(E) dated May 14, 2025, issued under sub-section (1) of Section 53 of the Banking Regulation Act, the government has suspended the applicability of sub-section (2) of Section 19 of the Act for Indian Bank. This provision typically restricts banks from holding shares in any company exceeding 30% of that company's paid-up capital.
Key Highlights of the Notification
- Exemption Granted To: Indian Bank
- Exceeding Stake In: ASREC (India) Limited
- Regulatory Provision Exempted: Section 19(2) of the Banking Regulation Act, 1949
- Validity of Exemption: Till 31st March 2026
- Effective Date: From the date of publication in the Official Gazette
Background: What is Section 19(2)?
Section 19(2) of the Banking Regulation Act restricts banks from holding shares in any company - other than a subsidiary - beyond 30% of its paid-up capital. However, under Section 53(1), the central government, in consultation with RBI, can grant exemptions in specific cases deemed to be in public or strategic interest.
What is ASREC (India) Ltd?
ASREC (Asset Reconstruction Company - India) is a key player in India's asset reconstruction sector, focusing on the recovery of non-performing assets (NPAs). Indian Bank's significant shareholding in ASREC aligns with its broader goal of strengthening asset recovery and resolution frameworks.
Why the Exemption Matters
This exemption allows Indian Bank to maintain strategic control and influence in ASREC beyond the usual regulatory limit. The extension till March 2026 will provide the bank with flexibility to manage its investment without regulatory pressure for immediate divestment.
Conclusion
The Ministry of Finance's decision highlights the government's proactive approach in supporting public sector banks' strategic holdings in asset reconstruction companies. It also reflects confidence in Indian Bank's role in the financial sector's stability and recovery infrastructure.
Official copy of the notification is as follows
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