Current Affairs · Banking Regulations
When a bank provides Mutual Fund (MF) services through a subsidiary acting as a sponsor, what is the maximum percentage of the paid-up capital of the Asset Management Company (AMC) that the bank can typically hold as per RBI's investment guidelines?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank cannot hold more than 10 percent in any AMC as it would lead to a conflict of interest between the bank's lending business and investment strategy.
- 2The bank can hold up to 75 percent of the AMC capital, but it must divest to 50 percent within five years of the commencement of the Mutual Fund's operations.
- 3The bank is restricted to holding only 49 percent of the AMC capital to ensure that the Mutual Fund operates as an independent joint venture.
- 4The bank can hold up to 100 percent of the AMC capital provided the total investment in all financial services subsidiaries does not exceed 20 percent of its paid-up capital and reserves.✓
Correct answer
The bank can hold up to 100 percent of the AMC capital provided the total investment in all financial services subsidiaries does not exceed 20 percent of its paid-up capital and reserves.
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