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IDFC looking to bring foreign shareholding below 50% for bank licence

But says if it doesnot get the licence it will take steps to increase it back to 74%

Press Trust of India New Delhi
Infrastructure financing firm IDFC, which has applied to RBI for a bank licence, today said it is not eligible to obtain one as foreign shareholding in the institution exceeds the permissible limit of 50% and is working to meet the norms.
 
IDFC said in a BSE filing that the institution would endeavour to bring down the foreign shareholding to below 50% in case it gets bank licence from the RBI.
 
IDFC is one of the 25 applicants for new bank licence, which have applied for a bank licence under the RBI's guideline on 'Licensing of New Banks in Private Sector' issued in February. The licences are likely to be issued next year.
 
 
"The Board of Directors on December 19, passed a circular resolution approving postal ballot process for seeking an enabling resolution from the shareholders to authorise the board...To keep reducing ceiling limit of the foreign shareholding from existing 54% to 49.9% in various stages...," IDFC said in its filing.
 
It further said that in case it does not receive the bank licence from RBI, it "will take steps to reinstate the ceiling on the foreign shareholding back up to 74%.
 
The RBI guidelines require that the eligible promoters of a bank should to be 'owned and controlled by residents'.
 
Shares of IDFC declined by 2.21% to Rs 103.90 per share on the BSE.
 
IDFC said that at the time of submitting its application to the RBI for bank licence in July, the ceiling on shareholding of FIIs, FDI, NRI and OCBs in the institution was 74%, while the actual shareholding was around 53.17%. As on December 6, the actual foreign shareholding was around 53.17%.
 
It further said that while making the application to the RBI, the financial institution had "undertaken to limit the ceiling of the foreign shareholding to below 50% if IDFC were to get banking licence." It had obtained the shareholders approval on July 29 to restrict the foreign shareholding ceiling to 54% from earlier level of 74%.
 
Initially, 26 entities evinced interest in entering the banking arena. Tata Sons, the holding company of Tata group, withdrew its application last month leaving 25 players in the fray.
 
Public sector units India Post and IFCI, private sector Anil Ambani Group and Aditya Birla group submitted applications on July 1.
 
In the past 20 years, the RBI licensed only 12 banks in the private sector in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.

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First Published: Dec 19 2013 | 9:16 PM IST

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