A petition has been filed in the Delhi High Court questioning the fit and proper status of Hindujas as promoters of private sector lender, IndusInd Bank. Also, the petition has sought the court’s intervention against Hindujas plan to increase promoter stake in the bank.
In his second such petition on the matter, petitioner, Mahek Maheshwari, has alleged laxity on the part of the Reserve Bank of India (RBI) in adhering to an earlier High Court direction. RBI is the regulator for banking sector and frames the guidelines that governs Indian banks.
Earlier, responding to the first petition, the Delhi HC had asked the banking regulator to consider the concerns raised in the petition and treat it like representation.
Subsequently, the RBI registered a complaint, however, the same was later allegedly disposed of on the grounds that the issue is sub judice before the Delhi High Court, the fresh petition says.
This prompted the petitioner to move Delhi High Court with a second petition alleging that the RBI did not adhere to the court directions properly.
Who are Hindujas
Hindujas are the promoters of IndusInd Bank and have 16.52 per cent stake in the bank through IndusInd International Holding Ltd which hold 12.59 per cent and IndusInd Ltd with 3.93 per cent as on March, 2022.
Earlier, Hindujas had publicly expressed their intent to increase the promoter stake in the bank after a recent rule change by the RBI. In November last year, the RBI changed a rule that let promoters in private banks to have up to 26 per cent stake in the bank as against 15 per cent earlier.
Following this, Hindujas had reportedly approached the regulator with a request to increase their holding in the bank. There is no progress on this till this point.
The petition
In his two petitions on this issue, Maheshwari has sought directions for the RBI from the court for conducting an SIT probe against the Hindujas for alleged financial frauds in various jurisdictions. Further, the petition questioned the role of Hindujas as promoters of IndusInd Bank at the back of the alleged frauds.
Also, the petitioner has sought to stay the central bank’s decision to let promoters up stake in private banks to 26 per cent.
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“Petitioner previously also alleged that Reserve Bank of India is not at all taking the situation seriously it will wake up only when IndusInd Bank will fall,” the fresh petition says.
What the petitioner wants
Citing a number of instances of failure of financial institutions in India on account of siphoning off of funds, the petitioner has argued against permitting promoter stake in banks to be increased in IndusInd Bank.
As per the petition, if the rule on increasing the cap on promoter stake in private banks is not stayed, banks like IndusInd Bank may see a tragic fall as the promoters may indulge in financial irregularities for their own benefit.
The petitioner has argued that Hinduja brothers already have criminal antecedents, and are not fit and proper in their position as a bank’s promoters.
“These recommendations provide unbridled power to private promoters especially the corporate houses to play with depositors money by way of controlling the bank as the regulatory mechanism is on papers by reserve bank of India & not on execution platform,” the petition says referring to the IWG recommendations accepted by the RBI.
It is also the case of the petitioner that the RBI “is not working as a preventive & prudent policy maker & executor but as a curative executor of Policy,” the petition said.
According to the petitioner, with the RBI “flouting” the high court’s order to look into the concerns raised by the petitioner, he has had to approach the court once again to seek not only a probe into the Hindujas but also to seek a stay on the RBI’s policy on increasing shareholder cap for promoters of private banks.
The petition is yet to come up for hearing before the high court.
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