[sbinews] Indus Ind Bank
- From: sbistcbangalore@xxxxxxxx
- To: sbinews@xxxxxxxxxxxxx
- Date: Tue, 23 Dec 2003 07:15:04 +0500
RBI tells IndusInd to change holding co's stake into FDI
ANURAG JOSHI
TIMES NEWS NETWORK[ TUESDAY, DECEMBER 23, 2003 02:50:39 AM ]
MUMBAI: The Reserve Bank of India (RBI) has asked promoters of IndusInd Bank —
the Hindujas, to change the stake held by the holding entity, IndusInd
International Holdings (IIHL) into foreign direct investment (FDI), if they
seek to raise their equity stake in the private bank.
The Hindujas had approached RBI to raise their holding in the bank to 49%. At
present, the Hindujas-controlled IIHL holds 41.3% stake in the bank. It is an
overseas corporate body (OCB).
OCBs are currently barred by the RBI from buying equity from both primary and
secondary markets. Though the regulator is silent on the current status of
IIHL’s stake, any further purchases of the bank’s shares by the promoters would
require conversion of IIHL’s stake in the bank into FDI and permission from
FIPB for hiking the stake.
“In any case, the promoters are not in a rush to raise their stake,” said
sources. The promoters want to hike their holding through purchase of shares
from the secondary market, the sources added.
This is the first instance when the RBI has directed a bank to convert an
existing OCB holding into FDI for the purpose of raising stake by promoters.
Recently, IndusInd Bank’s board gave an ‘in-principle’ approval to acquire
another group company Ashok Leyland Finance.
Sources said that the OCB status of IIHL is not a problem for the moment, since
this entity (registered in Mauritius ) is owned by non-resident Indians (NRIs),
which are exempted from the RBI’s ban on OCBs.
Recently, the promoters merged IEFL, an erstwhile holding entity, with the
bank. Ahead of the merger, IEFL held 24.9% in the bank and IIHL 25%. IIHL held
51% of IEFL, while 49% was held by minority shareholders. Current regulations
allow domestic promoters to hold up to 49% in private banks. The government is
likely to hike this ceiling to 74% shortly.
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