The list of banks that will gain from the RBI move includes Vysya Bank, Bank of Madura, Bank of Rajasthan, HDFC Bank, Global Trust Bank, ICICI Bank, Federal Bank, United Western Bank, Nedungadi Bank, IndusInd Bank, Jammu and Kashmir Bank and Bank of Punjab. Besides, UTI Bank, Centurion Bank, IDBI Bank and TimesBank are slated to hit the capital market and get their shares listed this fiscal. Banks in the private sector were earlier required to obtain prior approval of the Reserve Bank for approval of all types of shares like public, preferential, rights/special allotment to employees and bonus shares.

"These intructions have been reviewed and it has been decided that in future, banks whose shares are listed on thestock exchanges need not seek prior approval of the RBI for issue of shares except bonus shares. The banks should, however, comply with relevant regulations of the Securities and Exchange Board of India and seek their approval wherever necessary," the apex bank's directive said. However, the central bank has said that as and when such an issue is made by a listed private sector bank, it should submit a report to the central bank giving full details of the issue. The banks will continue to seek approval of the Reserve Bank for issue of bonus shares.

Sources said that the Reserve Bank has done the right thing by stating that approval for bonus shares is imperative as bonus issues are made out of free reserves and there is a chance that banks might misuse it.