Federal Bank now mostly foreign owned, HDFC to raise foreign shareholding
26 Dec 2013
Kerala-based Federal Bank has denied plans to change is ownership structure or change the existing foreign ownership limit even as reports said the bank has moved the Foreign Investment Promotion Board (FIPB) to seek approval for further raising foreign investment in its equity.
Reports quoting an official of the bank said on Tuesday that the FIPB approval has been sought for existing foreign investments in Federal Bank and not for any additional investments.
The bank said it has received FIPB approval for hiking foreign shareholding limit to 74 per cent (which includes 49 per cent to Foreign Institutional Investors, 24 per cent for NRIs and one per cent to overseas corporates).
The FIPB approval was required to maintain status quo of the limits and hence the Reserve Bank of India asked the bank to get it cleared by the former.
"The earlier rule for increasing foreign shareholding limit in the bank was through a two-third approval at the annual general meeting and then it goes to the board," CP Sasidharan, zonal head of the bank, said.
"But, since April this year, the rules changed and one has to apply to the Foreign Investment Promotion Board (FIPB). When this application was done, there arose some misunderstanding and news surfaced that we are seeking foreign investors. The whole thing was mistaken and there are no plans at all to alter our structure," he was quoted as saying on Tuesday.
Meanwhile, the FIPB, at its meeting on 30 December, will consider 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 FDI and 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.