Axis Bank seeks FIPB nod to hike foreign stake limit

Bank sends notice to stock exchanges informing the move

Axis Bank,the third largest private lender in India,has sought permission of the Foreign Investment Promotion Board (FIPB) for increasing foreign shareholding limit from 49 per cent.

The banks move has come after the Reserve Bank banned fresh purchases by foreign investors after foreign stake breached the sanctioned limit of 49 per cent.

The foreign shareholding in the bank,as on June 30,2013,was 48.96 per cent and this includes investments through the foreign direct investment (FDI) route in the form of Global Depository Receipts (GDRs) of 8.08 per cent and other foreign holdings including FIIs of 40.88 per cent. However,the bank did not indicate the higher limit its looking for.

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Early this year,the RBI had said Yes Bank had breached the 49 per cent cap.

Under the current FDI policy of the government,foreign shareholding in private sector banks is allowed up to a ceiling of 74 per cent of the paid-up voting equity capital. However,the RBI has stipulated that the aggregate non-resident shareholding from FDI,NRIs and FIIs in the new private sector banks should not exceed 49 per cent of the paid-up equity capital for the first 5 years from the date of licensing of the bank.

Axis Bank shares closed 0.68 per cent down at Rs 980.45 on the Bombay Stock Exchange on Tuesday. All private sector lenders ICICI Bank,HDFC Bank,ING Vysya,Development Credit Bank,Federal Bank,IndusInd Bank and YES Bank have significant foreign shareholding. However,these private banks are considered as Indian banks under a formula thrashed out by the government and the RBI last year.

The RBI had last week notified that the foreign shareholding by GDR,American Depository Receipts (ADRs),foreign direct investment (FDI),NRI/ persons of Indian origin (PIO) and FIIs in Axis Bank crossed the overall limit of 49 per cent of its paid-up capital and that no further purchases of shares of the bank would be allowed through stock exchanges in India on behalf of GDR,ADR,FDI,NRI,PIO and FIIs. The bank had hiked the base rate by 25 basis points to 10.25 per cent on Monday.

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With its 2,021 domestic branches (including extension counters) and 11,488 ATMs across the country,as on June 30,2013,the network of Axis Bank spreads across 1,300 cities and towns. The bank also has overseas offices in UK,Singapore,Hong Kong,Shanghai,Colombo,Dubai and Abu Dhabi.

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