SC on increase in bank's foreign shareholding

The Supreme Court has declined to pass any interim order on a petition challenging the Constitutional validity of the Centre's decision to permit shareholding of foreign investors upto 74 per cent in the banking companies. A bench headed by Chief Justice K G Balakrishnan and Justice M K Sharma however, asked the Bombay High Court to expeditiously dispose off the pending writ petition filed on the issue by Salim Akbarali Nanji, aggrieved shareholder of the private sector DCB bank. Nanji had in his writ petition before the High Court challenged the decision of the Reserve Bank of India (RBI) to grant "approval letter" to the DCB permitting the latter to allot preferential shares upto Rs 310 crore to corporate companies and foreign investors. The RBI's approval letter was in pursuant to the "Press Note" No 2 (2004 series)" issued by the Centre granting such benefits to the foreign investors, the petitioner submitted. The High Court while admitting the writ petition however, rejected his plea for an interim stay on the allotment move, upon which he filed the special leave petition (SLP) in the apex court. According to the petitioner, the bank's move approved by the RBI will result in the shareholding of the foreign investors from 60 to 67 per cent and as a result the shareholding of India retail investors and minority shareholders in the bank will be reduced from 23 per cent to 19 per cent.
Press Trust of India / New Delhi May 6, 2008
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