The Ministry of Finance, on the recommendation of the Reserve Bank of India (RBI), has granted a five-year exemption to IDFC First Bank Limited from the provisions of Section 19(2) of the Banking Regulation Act, 1949. The exemption allows the bank to continue holding more than 30% of the paid-up capital in Niraj Kakad Constructions Private Limited, surpassing the statutory investment limit typically imposed on banking companies.
Published via Notification S.O. 3018(E) dated July 7, 2025, the exemption is effective immediately and will remain in force until July 7, 2030, unless withdrawn earlier. This regulatory relief facilitates continuity in IDFC First Bank's investment in the construction firm, which may be part of a strategic or legacy investment portfolio.
Section 19(2) of the Banking Regulation Act restricts banks from holding more than 30% of the paid-up share capital of a company that is not a subsidiary. However, under Section 53, the Central Government holds the power to grant exemptions in public interest, based on RBI's recommendation.
The notification clarifies that the exemption will not affect any actions taken or obligations incurred before its cessation.
Official copy of the notification has been attached
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