axis bank gets nod to raise fdi limit to 62%

Publication: The Economic Times Mumbai;Date: Dec 27, 2013;Section: Economy;Page: 17 Axis Bank Gets Nod to Raise FDI Limit to 62% OUR BUREAU NEW DELHI The government has approved Axis Bank's proposal to raise the foreign investment limit in the bank to 62% from 49%, which will facilitate the sale of the government’s stake in it apart from allowing overseas entities to pick up shares. The government currently holds 20.72% of the bank through the Specified Undertaking of the Unit Trust of India (SU-UTI), which is worth nearly . 13,000 crore. The budget for the current year provides for raising . 15,000 crore from the disinvestment of residual stakes in non-state companies. The government holds such stakes in Hindustan Zinc, Balco, Larsen & Toubro and ITC among a few others. “The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from 49% to 62% subject to the aggregate foreign institutional investors’ (FIIs’) holding not exceeding 49% of the paid up equity share capital of the bank,” the government said in a statement. The government expects the higher limit could yield an inflow of about . 7,250 crore. The bank's stock ended Thursday at . 1,298.2, up 1.21%, on the BSE. Axis Bank had sought the government’s nod for an increase in the foreign investment limit after the Reserve Bank of India had barred further buying in the bank by FIIs and non-resident Indians (NRIs) as the 49% limit had been reached. As of September this year, FII holding in the bank was at 43.37%, while global depository receipts (GDRs) totalled 4.54%. Since the FII limit in the bank is still 49%, effectively FIIs would only have room to invest 4.54% more, to the extent of GDR holding. The rest of the higher limit would be available to non-FII investors such as NRIs and trusts. The promoters of the bank are Life Insurance Corporation, General Insurance Corporation, New India Assurance, National Insurance Company and the administrator of SU-UTI. The government has in all budgeted . 55,000 crore from disinvestment, including . 40,000 crore from regular stake sales in state-run companies. The government has so far managed to raise only . 3,000 crore. It is counting heavily on the sale of its remaining stake in Hindustan Zinc and Balco, which is expected to fetch over . 20,000 crore. ET had reported earlier this month that the government has decided to auction its residual stakes in these companies that are majority owned by the Vedanta Group. The government has also been exploring its options with SU-UTI and Axis Bank is likely to be the first to be divested. Once foreign flows into the bank cross the 50% limit, as with HDFC Bank and ICICI Bank, Axis Bank will also become foreign owned. Further investment by the lender in its subsidiaries will be governed by the foreign direct investment (FDI) policy, the official said. The bank's seven subsidiaries are Axis Capital, Axis Finance Private Ltd, Axis Private Equity Ltd, Axis Trustee Services Ltd, Axis Asset Management Company, Axis Mutual Fund Trustee Ltd and Axis UK Ltd. Axis Bank Gets Nod to Raise FDI Limit to 62% http://epaper.timesofindia.com/Repository/getFiles.asp?Style=OliveXLi... 1 of 2 12/27/2013 8:37 PM

Upload: soumitribhusannanda

Post on 24-Dec-2015

2 views

Category:

Documents

0 download

Report

Download

Embed Size (px):

DESCRIPTION

TRANSCRIPT

Page 1: Axis Bank Gets Nod to Raise FDI Limit to 62%

Publication: The Economic Times Mumbai;Date: Dec 27, 2013;Section: Economy;Page: 17

Axis Bank Gets Nod to Raise FDI Limit to 62%OUR BUREAU NEW DELHI

The government has approved Axis Bank's proposal to raise the foreign investment limit in the bank to 62% from 49%, which willfacilitate the sale of the government’s stake in it apart from allowing overseas entities to pick up shares. The government currentlyholds 20.72% of the bank through the Specified Undertaking of the Unit Trust of India (SU-UTI), which is worth nearly . 13,000crore.

The budget for the current year provides for raising . 15,000 crore from the disinvestment of residual stakes in non-statecompanies. The government holds such stakes in Hindustan Zinc, Balco, Larsen & Toubro and ITC among a few others. “TheCabinet Committee on Economic Affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from49% to 62% subject to the aggregate foreign institutional investors’ (FIIs’) holding not exceeding 49% of the paid up equity sharecapital of the bank,” the government said in a statement. The government expects the higher limit could yield an inflow of about .7,250 crore.

The bank's stock ended Thursday at . 1,298.2, up 1.21%, on the BSE.

Axis Bank had sought the government’s nod for an increase in the foreign investment limit after the Reserve Bank of India hadbarred further buying in the bank by FIIs and non-resident Indians (NRIs) as the 49% limit had been reached.

As of September this year, FII holding in the bank was at 43.37%, while global depository receipts (GDRs) totalled 4.54%. Sincethe FII limit in the bank is still 49%, effectively FIIs would only have room to invest 4.54% more, to the extent of GDR holding. Therest of the higher limit would be available to non-FII investors such as NRIs and trusts.

The promoters of the bank are Life Insurance Corporation, General Insurance Corporation, New India Assurance, NationalInsurance Company and the administrator of SU-UTI. The government has in all budgeted . 55,000 crore from disinvestment,including . 40,000 crore from regular stake sales in state-run companies. The government has so far managed to raise only . 3,000crore.

It is counting heavily on the sale of its remaining stake in Hindustan Zinc and Balco, which is expected to fetch over . 20,000crore. ET had reported earlier this month that the government has decided to auction its residual stakes in these companies thatare majority owned by the Vedanta Group.

The government has also been exploring its options with SU-UTI and Axis Bank is likely to be the first to be divested.

Once foreign flows into the bank cross the 50% limit, as with HDFC Bank and ICICI Bank, Axis Bank will also become foreignowned. Further investment by the lender in its subsidiaries will be governed by the foreign direct investment (FDI) policy, the officialsaid. The bank's seven subsidiaries are Axis Capital, Axis Finance Private Ltd, Axis Private Equity Ltd, Axis Trustee Services Ltd,Axis Asset Management Company, Axis Mutual Fund Trustee Ltd and Axis UK Ltd.

Axis Bank Gets Nod to Raise FDI Limit to 62% http://epaper.timesofindia.com/Repository/getFiles.asp?Style=OliveXLi...

1 of 2 12/27/2013 8:37 PM