Karur Vysya Bank gains as RBI raises FII investment ceiling

Karur Vysya Bank rose 1.28% to Rs 349.30 at 11:16 IST on BSE after the Reserve Bank of India allowed foreign institutional investors to buy up to 40% stake in the bank through primary/secondary markets in India.

Meanwhile, the S&P BSE Sensex was down 82.74 points or 0.4% at 20,805.59

On BSE, so far 4,551 shares were traded in the counter as against average daily volume of 47,192 shares in the past one quarter.

The stock hit a high of Rs 354.40 and a low of Rs 339 so far during the day. The stock had hit a record high of Rs 592.30 on 25 January 2013. The stock had hit a 52-week low of Rs 297.65 on 4 September 2013.

The stock had outperformed the market over the past one month till 2 January 2014, rising 0.44% compared with the Sensex's 0.05% fall. The scrip had also outperformed the market in past one quarter, gaining 11.56% as against Sensex's 7.03% rise.

The mid-cap private-sector bank has equity capital of Rs 107.20 crore. Face value per share is Rs 10.

The Reserve Bank of India advised on Thursday, 2 January 2014 that Karur Vysya Bank has passed a resolution at its board of directors' meeting and a resolution in its Annual General Meeting agreeing for the purchase of its equity shares by foreign institutional investors (FIIs) up to 40% of Karur Vysya Bank's paid-up capital through primary/secondary markets in India.

The Reserve Bank of India further said that the approval for raising FII investment limit to 40% in Karur Vysya Bank is subject to the condition that aggregate foreign investment in the bank should not exceed the composite sectoral cap of 49% (49% under Automatic Route and beyond 49% to 74% under Government Route) as prescribed by the Government from time to time.

As Karur Vysya Bank had passed the necessary resolutions in this regard, equity shares of the bank can now be purchased through primary market and stock exchanges provided the purchase of equity shares by a single FII/SEBI approved sub-account of a registered FII in the bank shall not exceed 10% of the paid-up equity capital of the bank, the RBI said. It may be ensured that the investments made are within the stipulated ceilings.

It may be noted that the present policy of Department of Banking Operations and Development (DBOD) requires RBI acknowledgement for acquisition / transfer of shares of 5% and more of a private sector bank by FIIs, based upon policy guidelines on acknowledgement of acquisition / transfer of shares issued on 3 February 2004.

Total foreign holding in Karur Vysya Bank stood at 25.7% (as per the shareholding pattern as on 30 September 2013), of which FII's held 24.89%.

Karur Vysya Bank's net profit declined 37.6% to Rs 82.89 crore on 22.7% growth in total income to Rs 1378.89 crore in Q2 September 2013 over Q2 September 2012.

Karur Vysya Bank is a private-sector bank offering a wide gamut of financial services to its customers.

Powered by Capital Market - Live News