The Union Cabinet on Wednesday approved the proposal to grant HDFC Bank permission to raise additional capital of up to Rs 24,000 crore from foreign direct investment.
“The Union Cabinet has approved the proposal for grant of permission to M/s. HDFC Bank Ltd. to raise additional share capital of up to a maximum of Rs 24,000 crore, including premium, over and above the previous approved limit of Rs 10,000 crore, such that the composite foreign shareholding in the bank shall not exceed 74% of the enhanced paid-up equity share capital of the bank,” the government said in a release.
“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% of the enhanced paid-up equity share capital of the bank,” the release added. “It will be subject to foreign direct investment policy conditionalities and other sectoral regulations/guidelines.”
Capital adequacy ratio
The government added that the proposed investment is expected to strengthen the capital adequacy ratio of the bank.
In December, HDFC Bank’s board approved a capital raising plan of Rs 24,000 crore through a mix of instruments including preferential allotment to its parent HDFC. HDFC plans to infuse Rs 8,500 crore in HDFC Bank.
