The Cabinet Committee on Economic Affairs (CCEA), on Thursday, approved increase in the foreign investment limit in Axis Bank to 62 per cent from 49 per cent. The aggregate foreign institutional investors’ (FIIs) holding in the bank, however, cannot exceed 49 per cent of the paid-up equity share capital of the bank, according to the official release.
The Reserve Bank had recently said that the 49 per cent limit for FIIs in the bank had already been reached.
At current market prices, the approval could result in foreign investment of Rs.7,250 crore, the release said. The Axis Bank proposal was referred to the CCEA by the Foreign Investment Promotion Board (FIPB). Proposals involving foreign direct investment (FDI) of more than Rs.1,200 crore are approved by the CCEA. The FDI policy of the government allows foreign shareholding of up to 74 percent of the paid-up voting equity capital in banks. In August too, the RBI had imposed a similar restriction on Axis Bank when the foreign shareholding in the bank had reached the 49 per cent limit. A month later, the FIPB had allowed foreign equity holding in the bank to go up to 62 per cent.