Consider the following statements: 1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid up capital. 2. Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route. Which to these statements is/are correct?

1. The question asks to verify two statements regarding shareholding limits in private sector banks in India, relevant to policies around 2003. 2. Statement 1: The maximum limit of shareholding of Indian promoters in private sector banks is 49% of the paid-up capital. RBI guidelines around that time stipulated Promoter shareholding limits, but they were generally required to dilute their stake over time, often below 49%, and certainly not capped *at* a maximum of 49% as an ongoing requirement for all promoters. The exact limits and timelines varied. For instance, guidelines often aimed for dilution to 10-15%. A fixed max limit of 49% seems incorrect. 3. Statement 2: Foreign Direct Investment (FDI) up to 49% from all sources is permitted under the automatic route. FDI policy for private banks around 2001-2003 allowed FDI up to 49%, but it typically required FIPB (Foreign Investment Promotion Board) approval, meaning it was not under the automatic route. The automatic route generally applied to lower FDI percentages or specific sectors. 4. Since both statements appear incorrect based on the typical regulatory framework of that era (promoter dilution norms varied and were usually lower than 49% eventually; FDI up to 49% likely required approval, not automatic route), the option 'Neither 1 nor 2' seems plausible. 5. The official answer is (D) 'Neither 1 nor 2'. This confirms that both statements are considered incorrect. 6. Analysis based on key (D): Statement 1 is incorrect (promoter shareholding limit was not fixed at 49%). Statement 2 is incorrect (FDI up to 49% was likely not under the automatic route).