On August 10 2017 the Ministry of Corporate Affairs issued a notification exempting regional rural banks (RRBs) from the applicability of the merger control regime in India. The notification provides that Sections 5 and 6 of the Competition Act 2002, which regulate combinations, will not apply to amalgamations of RRBs for which the government has issued a notification under Section 23A(1) of the Regional Rural Banks Act 1976. This exemption is applicable for a five-year period until August 9 2022.
Pursuant to Section 23A of the Regional Rural Banks Act, the government has the power to order the amalgamation of two or more RRBs, if it is in the interest of:
- the public;
- development of the area served by the RRBs; or
- the RRBs themselves.
Before the notification, such amalgamations – while undertaken pursuant to orders issued by the government, rather than on the volition of the RRBs – required filing a notification to the Competition Commission of India under the Competition Act.
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For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email ([email protected]). The Vaish Associates website can be accessed at www.vaishlaw.com.
