RBI modifies meaning of Related Person with respect to Bank, Understand new meaning

The Reserve Bank of India (RBI) has modified the meaning of Related Person with respect to Bank. Related Person with respect to a bank shall mean a person, and the relatives of such a person, where the person:

1. is either a promoter, or a director, or a KMP of the bank; or
2. owns more than five per cent of paid-up equity share capital of the bank or can, either singly or jointly, exercise more than five per cent of the voting rights of the bank on account of either ownership or voting agreement or through shareholders’ agreement or through any other arrangement; or
3. can, through an agreement with the bank, nominate a director to its Board; or
4. is either singly or jointly, in control of the bank.

‘Related Party’ with respect to a bank shall mean a related person, a reciprocally related person, or any of the following entities:

1. where a related person or a reciprocally related person is a partner, manager, KMP, director or a promoter; or
2. where a related person or a reciprocally related person is a shareholder with more than ten per cent of paid-up equity share capital; or
3. where a related person or a reciprocally related person is having control, whether singly or jointly with another person; or
4. where a related person or a reciprocally related person controls more than twenty per cent of voting rights on account of ownership or through a voting agreement or through any other arrangement; or
5. where a related person or a reciprocally related person has the power to nominate a director to its Board; or
6. which is accustomed to act on the advice, direction, or instruction of a related person or reciprocally related person; or
7. where a related person or a reciprocally related person is a guarantor or a surety; or
8. where a related person or a reciprocally related person is a trustee or an author or a beneficiary and where the entity is in the form of a private trust.
9. which is related to the related person or a reciprocally related person as a subsidiary or a parent company or a holding company or an associate or a joint venture.