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CS Professional · Banking and Insurance - Laws and Practice · Control over Organization of Banks

RBI concludes, after giving a hearing, that Mr. Anand and his associates acting in concert, holding 12% of the voting rights of Narmada Bank Ltd, are not fit and proper. What can RBI order under Section 12B(8)?

RBI can order that they shall not, in the aggregate, exercise voting rights on poll beyond five per cent of the total voting rights of all shareholders. Section 12B(8) permits this only after giving them an opportunity of being heard.

  1. AThey must sell all shares within one day
  2. BTheir shares stand cancelled
  3. CThey shall not in aggregate exercise voting rights on poll in excess of five per cent of total voting rightsCorrect
  4. DThey may vote only on special resolutions

Explanation

Section 12B(8) allows RBI, after hearing, to restrict such persons from exercising in aggregate voting rights on poll beyond five per cent of total voting rights. It does not cancel shares or compel sale.

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