RBI's nod for FII stake hike by 700 bps in J&K Bank

The Jammu and Kashmir Bank has received the Reserve Bank of India's nod for enhancing the cap of Foreign Institutional Investment (FII) in the bank from 33 per cent to 40 per cent.

The decision to increase the cap had been taken by the Board of Directors of the Bank in July this year, in view of the growing interest from FIIs to increase their stake in bank's paid up equity share capital.

A senior manager in the Bank told Business Standard the number of FII holders and their holding in the Bank's stock have subsequently gone up to 52 and 32.81 pet cent as on December 2. It had gone to 28 per cent in March last year.

He said some major deals had taken place on Bank's stock, ranging buyers from vanilla to hedge funds. Prominent funds "� Small Cap World Fund Inc and FID Funds Ltd have purchased 5.4 per cent and 4.23 per cent share of the Bank's stock.

Similarly, CLSA merchant Bankers LTD A/C CLSA (Mauritius) Ltd and Vontobel Fund for East Equity have purchased 3.72 per cent and 3.67 per cent shares of the Bank respectively.

Aberdeen Asset Managers Ltd A/C Aberdeenintern and Citygroup global markets Mauritius Pvt Ltd have purchased 3.54 per cent and 1.38 per cent of the stock, while Emerging Markets Growth Funds Inc and Capital International Emerging Markets Fund have purchased 1.11 per cent and 0.62 per cent of the stock, respectively.

Fund managers , largely impressed by the modified strategy adopted by the bank, aimed at lending more in J&K than outside, have since some time wanted an increased share in bank's stock.

This is largely attributable to J&K's reviving economy, which is witnessing heightened economic activity in road, infrastructure projects like hydel power, railways, etc, and fuelling major lending avenues for the bank within the state, besides earning high yields for the bank.

To improve its yield on advances outside J&K, the Bank had chalked a strategy to position itself as a specialist bank focusing on financial commodities and was accordingly targeting industries like leather in Chennai, Kanpur, Kolkata and Agra, the spices sector in southern and western areas of the country, he added.