Govt. Allows IDFC First Bank to Hold Over 30% in Niraj Kakad Constructions

Notification No. S.O. 3018(E); Dated: 07.07.2025

The Central Government, acting on the recommendation of the Reserve Bank of India (RBI), has granted an exemption to IDFC First Bank Ltd. under the Banking Regulation Act, 1949.

1. Exemption from Shareholding Limit under Section 19(2)

The exemption specifically relates to the provisions of Section 19(2) of the Act, which restricts a banking company from holding shares in any company—whether as pledgee, mortgagee, or absolute owner—in excess of 30% of that company’s paid-up share capital or 30% of the bank’s own paid-up capital and reserves, whichever is less.

In this case, IDFC First Bank Ltd. has been permitted to hold shares exceeding the 30% threshold in Niraj Kakad Constructions Pvt. Ltd.

2. Validity of the Exemption

• Effective Date – From the date of publication in the Official Gazette
• Validity Period – The exemption shall remain in force until July 7, 2030

This move allows the bank to retain or manage its investment in the said company without breaching the statutory ceiling imposed under the normal operation of Section 19(2).

3. Regulatory Significance

Such exemptions are granted selectively and typically in cases where the holding is part of a strategic investment, restructuring, or resolution plan. The RBI’s recommendation underscores regulatory oversight to ensure that such exemptions are aligned with the banking system’s prudential norms and financial stability.

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