IndusInd Bank has been allowed by the Reserve Bank of India (RBI) to increase its FII investment limit to 49 per cent. However, the central bank asked the IndusInd bank to ensure that the aggregate foreign investment in the bank does not exceed 74 per cent.
"The Reserve Bank...advise that its approval to the Induslnd Bank for raising FII investment limit to 49 per cent is subject to the condition that aggregate foreign investment in the bank should also not exceed the composite sectoral cap of 74 per cent," the apex bank said in a statement.
As on September-end, Foreign Institutional Investors' (FIIs) had 34.26 per cent stake in the bank.
In its Annual General Meeting, IndusInd Bank's promoters had passed resolutions to allow FIIs to buy up to 49 per cent of its paid-up equity capital through primary/secondary markets in India.
"As Induslnd Bank has now passed necessary resolutions in this regard, equity shares of Induslnd Bank can now be purchased through primary market and stock exchanges...," RBI said.
However, the purchase of equity shares by a single FII/ SEBI approved sub-account of a registered FII in the Induslnd Bank should not exceed 10 per cent.
The Reserve Bank said it would henceforth be monitoring the FII investment under Portfolio Investment Scheme (PIS) at sectoral cap/statutory ceiling as applicable and not the intermediate ceiling fixed by the bank.
"It will be the bank's responsibility to ensure that the applicable cap is not breached. The permission is being issued from FEMA angle only," it added.
As per the current norms, RBI needs to be intimated in case of transfer of five per cent or more shares of a private sector bank by FIIs.
With PTI inputs