FIPB again defers Kotak bank proposal for raising FII limit

The decision was deferred in want of comments from the Department of Financial Services, sources said

An inter-ministerial panel today deferred decision for the second time on Kotak Mahindra Bank's proposal for raising foreign investment limit in the bank to 55 per cent.

The Foreign Investment Promotion Board (FIPB) had taken up the application in its meeting, but the decision was deferred in want of comments from the Department of Financial Services (DFS), sources said.

The Finance Ministry sources further said the DFS is likely to submit its comments by the end of this month.

Earlier, the board had deferred decision on the proposal in its 217th meeting held on April 30.

Kotak is seeking FIPB approval to raise the aggregate foreign investment limit to 55 per cent.

The Reserve Bank has barred overseas investments in private sector lender after foreign shareholding in it hit the permissible threshold following merger of ING Vysya Bank with Kotak Bank.

Investments from FIIs, FPIs and foreign banks had reached 48.55 per cent in the merged entity.

FIPB is a single window clearance system for proposals on FDI. India allows FDI in most of the sectors through automatic route, but in certain segments considered sensitive for the economy and security, the proposals have to be first cleared by FIPB.