India’s central banking institution, the Reserve Bank of India (RBI), has rejected SBI Capital Markets’ request to raise its stake in an institutional equities joint venture (JV) with Investec’s local unit, reported Bloomberg.
SBI Capital Markets, a subsidiary of State Bank of India (SBI), sought approval to increase its holding in the JV from around 20% to around 40%.
The regulator raised concerns about overlapping business activities within SBI’s group companies.
It advised SBI to either pursue full ownership of the venture or ensure the arrangement aligns with draft regulations for financial entities.
The partnership between Investec India and SBI Capital Markets began in 2020 to expand their reach in the equity capital markets.
Investec India operates across corporate advisory, private credit, institutional equities, research and equity capital markets.
As per the RBI’s draft rules, released in October last year, a banking group cannot operate multiple entities conducting the same business or with identical regulatory licences.
It also restricts overlapping lending activities between banks and their subsidiaries.
However, the final guidelines have not yet been published.
Earlier this month, the RBI Governor said that the final guidelines will drop proposed limits restrictions on business overlaps between banks and their group entities.
SBI intends to submit a revised application after the RBI issues the final regulations, according to the media outletreport.
