This response came in wake of a query sent by the RBI both to HSBC and UTI Bank seeking details of the status of the entities in the merger.
According to sources, prior to the merger, HSBC had not clarified on the status of the arm to RBI before the takeover. Nor had it sought the permission of the Foreign Investment Promotion Board (FIPB) to float such a body.
The bank has also mentioned it will be soon seeking the regulatory approval from FIPB to launch the foreign company for justifying and effecting the merger. Thereafter, it will seek the permission from the RBI for necessary ratification of the merger.
As per the existing guidelines, FII stake in a bank is capped at 10 per cent, while the FDI limit is 49 per cent including the FII share. The market is of the view that the FDI limit on investment in banks will be raised to 74 per cent.
Moreover, with the enactment of the proposed amendments to the Banking Regulation Act, takeovers of banks will gain momentum.
There was another proposition of diluting government stake in public sector banks from 51 per cent to 33 per cent.
