The government on Tuesday approved Axis Bank’s proposal to raise foreign shareholding to 74 per cent, which is expected to bring in capital inflow of around Rs 13,000 crore into the country.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved increase in foreign investment from the current approved level of 62 per cent to 74 per cent of the total paid up share capital of the Axis Bank on a fully fungible basis.
WATCH VIDEO: Keystrokes – Smriti Irani Gets Textiles
“With the approval, foreign direct investment to the tune of Rs 12,973.14 crore will be received in the country with an estimated creation of 6,000 to 7,000 jobs over the next three years,” the government said in a statement.
Earlier this year, the Foreign Investment Promotion Board, headed by Economic Affairs Secretary Shaktikanta Das, had recommended the Axis Bank’s proposal to the CCEA for its approval, as the foreign investment was over Rs 5,000 crore.
- Punjab National Bank floats Rs 5,000-crore QIP, sees 14% equity dilution
- Sensex rebounds 149 points in early trade
- Revenue shortfall: Centre may get lower than expected dividend from PSBs
- Axis Bank to raise Rs 11,626 crore from Bain, LIC
- Government unveils Rs 9 lakh crore package to boost economy
- Axis Bank gets govt nod for hiking foreign investment from 49 pc to 62 pc
The foreign investment into the bank will be by way of Foreign Institutional Investors/ Foreign Portfolio Investors/Non-Resident Indians, Foreign Director Investment covering ADRs/ GDRs and Indirect Foreign Investment.
Axis Bank’s share closed at Rs 539.60 at Bombay Stock Exchange on Tuesday, down 0.79 per cent from the previous close.
Started in 1994, private sector lender Axis Bank is promoted by financial institutions such as UTI, LIC, GIC and its subsidiaries. As per the BSE database, promoters hold 30.76 percent in India’s third largest private lender Axis Bank, while 69.24 per cent is held by the public, as on March 31, 2016.
Among the promoters LIC owns the largest chunk 15.15 per cent in the bank, followed by SUUTI (Specified Undertaking of the Unit Trust of India) 11.93 per cent. The government has plans to sell its residual stake in the bank held through SUUTI. Among the public shareholders, foreign portfolio investors hold 42.27 per cent in the bank, while mutual funds hold 10.58 percent.
Axis Bank posted a 1.20 per cent decline in net profit at Rs 2,154.28 crore in the quarter ended March 2016 as against a profit of Rs 2180.59 in the same period of last year due to rise in provisioning and non-performing assets.
Gross NPAs of the bank surged by 48 per cent to Rs 6,087.51 crore (1.67 per cent of advances) in the March quarter from Rs 4,110.19 crore (1.3 per cent) a year ago. The bank will release its earnings results for April-June quarter on July 22.