India’s finance ministry is expected to seek cabinet approval to a proposal for giving proportionate voting rights to founders in private sector banks, the Financial Express said on Monday. Currently, the voting right of a single individual or entity is limited to 10 percent even if the shareholding is more.

A relaxation in the rule is necessary to give confidence to corporate houses that are planning to start banks and help improve competition in the sector, the newspaper said, citing an unnamed government source.

The federal government is also planning to amend rules and enable the central bank to seek information from banks about the activities of other arms of the holding company, it quoted the official as saying.

The move is expected to help avoid any contagion risk to the bank from related arms such as insurance, asset management, financial advisory and so on, it said.

Corporate groups such as the Tatas, Anil Dhirubhai Ambani Group, Aditya Brila Group and Larsen & Toubro are likely to apply for banking licences, the paper said.

Non-banking finance companies such as Shriram Transport Finance, SREI Infra, LIC Housing, Indiabulls, IL&FS and IFCI are keen to set up banks or get themselves converted into banks, it said.

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