MUMBAI: Private sector lender IndusInd Bank on Friday said the Reserve Bank of India (RBI) has cleared a proposal by Route One Investment Company LP (ROIC) to raise its stake in the lender by up to 10%.
The investor currently holds 4.96% stake in the bank and had approached the regulator seeking permission to buy up to 10%.
Earlier this year, the bank’s promoters, the Hinduja brothers, had expressed their interest in raising their stake in the lender to 26% from less than 15%. “You may have noted that the promoters of the bank have applied to the Reserve Bank of India (RBI) for increasing their permissible holdings to 26%. On a fully diluted basis the promoters of the bank have a holding of 14.68% which is very close to the current regulatory cap of 15%,” the bank had said in a stock exchange filing on 3 April.
However, the RBI was said to have declined the request, according to a Bloomberg report in June. On 7 June, the bank said its promoters were willing to purchase additional shares from the open market to reach 15% shareholding and stay within RBI's prescribed limit. Promoters of private banks are allowed to hold up to 15% stake in a bank as per RBI rules.
“Route One Investment Company LP, USA (ROIC) is an existing investor holding approximately 4.96% of the issued and subscribed capital of the Bank. ROIC approached the Reserve Bank of India seeking a prior approval to increase their stake in the Bank up to 10%, in accordance with the RBI Master Direction on Prior Approval for Acquisition of Shares in Private Sector Banks,” the bank said in a regulatory filing.
Based on the reference from RBI, the board of directors of IndusInd Bank, in their meeting on 5 July granted approval to the proposed acquisition.
“RBI has forwarded the bank a copy of the letter addressed to ROIC, granting approval for increasing their shareholding up to 10% of the paid-up voting equity capital of IndusInd Bank,” it said.
The investment will help the bank shore-up its capital adequacy numbers from 15.04% at the end of the March quarter. As the covid-19 pandemic rages on, most Indian banks are stocking up on provisions and are looking to hit the equity and debt markets to bolster capital. What has added to the concerns is the uncertainty around how the moratorium will impact their asset quality post 31 August, when the six months deferment ends, unless RBI extends it any further.
Shares of the bank were trading at ₹525 on the BSE, up 2% from its previous close.
