FIPB to take up HDFC Bank's foreign stake issue on December 30

Bank filed an application with the FIPB since the total foreign shareholding in the Bank crossed 49%

The Foreign Investment Promotion Board (FIPB) will consider on December 30 a proposal by HDFC Bank for raising foreign investment holding limit beyond the existing 49 per cent in the bank.

Earlier this month, HDFC Bank approached the FIPB for increasing foreign direct investment (FDI) and foreign institutional investors (FII) holdings as the foreign shareholding in the bank reached the ceiling of 49 per cent.      

“Since the total foreign shareholding in the bank (FII and FDI) has crossed 49 per cent, the bank has filed an application with the FIPB seeking approval for increasing its foreign shareholding limit, in accordance with the now prevailing guidelines,” HDFC Bank had said in a BSE filing.      

The Reserve Bank of India recently said the foreign shareholding in HDFC Bank has crossed the overall limit of 49 per cent of its paid-up capital and that no further purchases of shares of the Bank would be allowed through stock exchanges in India on behalf of FII/NRI/PIO/FDI/ADRs/GDRs.

The foreign shareholding in the bank (as on December 13) was 52.18 per cent of its paid-up capital.      

Shares of HDFC Bank closed at Rs 657.55 at the BSE on Tuesday, down 1.18 per cent over Monday.

In September, FIPB cleared proposals of Axis Bank to raise foreign holding to 62 per cent from 49 per cent. Axis Bank will become a “foreign-owned” lender, to be governed by FDI policy, following the go-ahead to its proposed increase in foreign investment holding to 62 per cent.

According to the FDI policy, downstream investment by an Indian company, “which is not owned and/or controlled by a resident entity/ies into another Indian company would be in accordance or compliance with the relevant sectoral conditions on entry route”.