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Business News/ Companies / News/  HDFC Bank hopeful of FIPB approval to increase foreign holding: Aditya Puri
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HDFC Bank hopeful of FIPB approval to increase foreign holding: Aditya Puri

HDFC Bank's shareholders approve a proposal to raise up to Rs10,000 crore by selling equity shares

HDFC Bank’s proposal to increase the foreign holding in the bank has been stuck with the FIPB since December. Photo: Priyanka Parashar/MintPremium
HDFC Bank’s proposal to increase the foreign holding in the bank has been stuck with the FIPB since December. Photo: Priyanka Parashar/Mint

Mumbai: HDFC Bank Ltd. is still awaiting permission from the Foreign Investment Promotion Board (FIPB) to increase the percentage of shares foreign investors can buy in the bank, managing director Aditya Puri told reporters.

At the bank’s annual general meeting on Wednesday, the bank’s shareholders approved a proposal to raise up to Rs10,000 crore by selling equity shares. Puri, however, said the bank does not need capital immediately.

“The approval (for capital-raising) is only an enabling resolution," Puri said, adding the bank is “still hopeful" of FIPB approval.

HDFC Bank’s proposal to increase the foreign holding in the bank has been stuck with the FIPB since December. The bank’s application followed a Reserve Bank of India (RBI) notification which barred foreign institutional investors (FIIs) from buying additional shares because shares held by overseas investors in the bank had crossed the ceiling of 49% of its paid-up capital.

HDFC Bank is seeking to increase the foreign direct investment (FDI) in the bank to 67.55% from the current 49%. However, this would exceed the cap of 74%, if parent Housing Development Finance Corp. Ltd.’s (HDFC) stake in the bank is classified as foreign holding. Since FIIs hold 75.7% in HDFC, there has been a debate over whether HDFC’s stake in HDFC Bank should be considered as foreign holding. According to the FDI policy that came into effect from 13 February, 2009, if foreign entities own and control a company, its downstream investments would be considered as foreign investment.

On Wednesday, HDFC Bank shares lost 0.57% to close at Rs824.05 per share on the BSE, while the benchmark index, Sensex lost 0.22% to close at 25313.74 points and the banking index, Bankex lost 0.43% to close at 17459.71 points.

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Published: 25 Jun 2014, 09:05 PM IST
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