The RBI has eased the approval process for mutual funds, insurers and pension funds buying bank shares. The new rules were notified on October 1 and took effect immediately.

Eligible investors can now get a one-time approval for subsequent acquisitions of up to 10 percent of a bank’s paid-up share capital or voting rights.

Earlier, an investor whose holding fell below 5 percent after a major acquisition had to seek fresh RBI approval before crossing the threshold again.

The facility covers SEBI-registered mutual funds, PFRDA-registered pension funds and IRDAI-registered insurers. They must not belong to the bank’s promoter group.

Prior approval remains mandatory for the first acquisition of a major shareholding. The rules apply to commercial banks, small finance banks, payments banks and local area banks.

The RBI issued four sets of Amendment Directions on October 1 for commercial, small finance, payments and local area banks. Applications go through the RBI’s PRAVAAH portal. The RBI can withdraw approval if conditions are breached.