Bank M&As may have to obtain clearance both from the Competition Commission of India (CCI) and Reserve Bank of India (RBI) according to recent reports.
As per the reports, banks have strongly advocated that they should be exempt from the scrutiny of CCI since they are already regulated by RBI. The same was also reflected in the Banking Laws (Amendment) Bill, 2011. However, this demand from the banking sector spurred regulators of other sectors such as telecommunication, insurance and shipping to make similar demands.
There was speculation earlier that only involuntary M&As directed by RBI would require approval from both RBI and CCI. However, all M&As of banking sector shall require approval of CCI for the competition portion of the deal and of RBI for the prudential aspects as per banking norms if this policy is enforced.
Proposed amendments to the Competition Act envisage no exemption for any sector in general with the Ministry of Corporate Affairs having the sole authority to grant exemptions on a case to case basis.