Mumbai: The cabinet on Wednesday cleared one of the largest foreign direct investment (FDI) proposals before it—a plan by HDFC Bank Ltd to raise 24,000 crore.

The capital infusion will not result in breaching the foreign equity holding cap of 74% in the private sector lender. “The current 72.62% foreign equity holding is being raised to 74% with this 24,000 crore FDI," said interim finance minister Piyush Goyal.

The bank’s management had made clear its intention to boost corporate lending at a time when other lenders are slowing down. The bank had announced its plans to raise 24,000 crore, the largest by any company, through a combination of preferential allotment and qualified institutional placement on 20 December.

Of this, the bank will raise 8,500 crore by selling shares to its parent Housing Development Finance Corp. Ltd, India’s largest mortgage lender.

The home financier owns 21.01% in HDFC Bank and will infuse funds in the bank to maintain its current shareholding.

The remaining 15,500 crore will be raised through the sale of shares, convertible securities or depository receipts.

“Given the high appetite for the bank’s shares among domestic and foreign investors, we don’t see an issue in the subscription of these shares," said Ashutosh Mishra, a banking analyst at Reliance Securities Ltd.

The funds will be used to boost HDFC Bank’s capital adequacy ratio (CAR) and also grow its balance sheet over the next four years. The bank’s CAR, which stood at 14.8% as of 31 March, will cross 18% once the capital infusion is completed.

HDFC Bank’s balance sheet at the end of March stood at 10.63 trillion, surpassing ICICI Bank’s balance sheet of 8.79 trillion.

The fund raising will come at a time when markets have been volatile due to foreign outflows, high crude oil price and rupee depreciation. FIIs have pulled out nearly $204.4 million from equity and $4.9 billion from debt this year.

HDFC Bank last raised equity capital in 2015—a sum of Rs9,800 crore through a mix of QIP and ADR issues.

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