Axis Bank gets nod to raise foreign shareholding to 74%

Move may get foreign direct investment of Rs 12,000 cr and create 7,000 jobs

Axis Bank, the country’s third largest private sector lender, has got the approval of the Cabinet Committee on Economic Affairs (CCEA) to raise its foreign shareholding to 74 per cent from 62 per cent.

According to guidelines, foreign shareholding in a private bank cannot exceed 74 per cent. This 12 per cent hike of foreign shareholding is likely to bring in investments of Rs 13,000 crore.

“With the approval, investment to the tune of Rs 12,973.14 crore will be received, with an estimated creation of 6,000 to 7,000 jobs over the next three years,” said a note by the CCEA.

Earlier this year, Axis Bank’s proposal to raise foreign shareholding was forwarded by the Foreign Investment Promotion Board to the CCEA as the capital inflow was more than Rs 5,000 crore.

The note added that the foreign investment would be by way of foreign institutional investors (FIIs), foreign portfolio investors (FPIs), non-resident Indians (NRIs), foreign director investment covering ADRs/GDRs and indirect foreign investment.

Last year, the Cabinet had removed the sub-limit within foreign shareholding, which earlier stated that FII investment should not form more than 49 per cent, out of the 74 per cent.

With this composite cap, capital raising had become easier for banks.  Other private sector lenders such as YES Bank and IndusInd Bank are also expected to benefit from this move. OTHER APPROVALS

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