Cabinet clears HDFC Bank's proposal to raise Rs 24,000 crore via FDI

NEW DELHI: The govt on Wednesday approved the proposal of HDFC Bank to lift additional capital Rs 24,000 crore by way of selling fairness to foreign traders to fund its industry growth.
This includes premium, over and above the former approved limit of Rs 10,000 crore, that the composite foreign shareholding within the financial institution should not exceed 74 per cent of the improved paid-up fairness share capital of the financial institution, Finance Minister Piyush Goyal mentioned after the Cabinet assembly chaired by way of Prime Minister Narendra Modi.

With the elevating of this capital, FDI within the financial institution will hit the regulatory ceiling of 74 per cent, he mentioned.

Currently, the FDI within the banks stands at 72.62 per cent.

As per the RBI guidelines, foreign protecting in public sector banks in India can not transcend 74 per cent.

"The decision would ensure that the composite foreign shareholding in the bank inclusive of all types of foreign investments, both direct and indirect, will not exceed 74 per cent of the enhanced paid-up equity share capital of the bank," the minister mentioned.

It will likely be subject to Foreign Direct Investment Policy conditionalities and other sectoral regulations or guidelines.


The proposed funding is expected to improve the capital adequacy ratio of the financial institution, he mentioned.


Of the extra Rs 24,000 crore, Rs 8,500 crore is proposed to be allotted to HDFC Ltd, the promoter of the financial institution, on a preferential foundation.


Remaining amount to be raised by way of factor of fairness stocks or convertible securities or depository receipts pursuant to a Qualified Institutions Placement, HDFC Bank had mentioned.


It is to be famous that the Cabinet in 2015 cleared an offer of HDFC Bank to lift Rs 10,000 crore from foreign traders.
Cabinet clears HDFC Bank's proposal to raise Rs 24,000 crore via FDI Cabinet clears HDFC Bank's proposal to raise Rs 24,000 crore via FDI Reviewed by kailash soni on June 14, 2018 Rating: 5
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