Consider the following statements: 1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital. 2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sec

examrobotsa's picture

Submitted by examrobotsa on

Q: 96 (IAS/2003)
Consider the following statements:
1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital.
2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route. Which to these statements is/are correct?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,11,64,12,13,39,11

keywords: 

{'foreign direct investment': [0, 0, 2, 7], 'shareholding': [0, 0, 1, 0], 'private sector banks': [0, 0, 1, 0], 'indian promoters': [0, 0, 1, 0], 'maximum limit': [0, 0, 1, 0], 'india': [8, 1, 7, 13], 'capital': [31, 3, 12, 18]}

The explanation of the provided answer is as follows:

Option 1: This statement is incorrect. As per the guidelines given by the Reserve Bank of India, the maximum limit of shareholding of an Indian promoter in private sector banks in India is currently 15% of the paid up capital, not 49% as mentioned in the statement.

Option 2: This statement is also incorrect. While Foreign Direct Investment (FDI) is indeed permitted in private sector banks in India, it is not limited to 49% from all sources under the automatic route. It can be up to 74% under the approval route concept where government approval is needed for FDI above 49%.

Option 3: Since both statement 1 and statement 2 are incorrect, this option which states both are correct is naturally incorrect as well.

Option 4: This option is correct, since neither statement 1 nor statement 2 is correct.

This is why the correct answer is option 4, `Neither 1 nor 2`.