IDFC not eligible for bank lincence
20 December 2013
Infrastructure financing firm IDFC, which had applied to RBI for a bank licence, today said it was not eligible for one as foreign shareholding in the institution exceeded the permissible limit of 50 per cent and was working to meet the norms.
According to IDFC's BSE filing, the institution would endeavour to bring down the foreign shareholding to below 50 per cent in case it got bank licence from the RBI.
IDFC, one of 25 applicants for new bank licence, had applied for a bank licence under the RBI's guideline on 'Licensing of New Banks in Private Sector' issued in February. The licences would likely 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 per cent to 49.9 per cent in various stages...," IDFC said in its filing.
The IDFC further said that in case it did not receive the bank licence from RBI, it "will take steps to reinstate the ceiling on the foreign shareholding back up to 74 per cent.''
IDFC was down 1.25 per cent to Rs102.60 on BSE following the company saying it was not eligible to obtain a bank licence as foreign shareholding in the institution exceeded the permissible limit of 50 per cent.
The announcement came after market hours on yesterday, 19 December 2013.
The BSE Sensex, meanwhile was up 75.42 points, or 0.36 per cent, to 20,784.04.
In this regard, IDFC's board has approved a postal ballot process to seek an enabling resolution from shareholders in a bid to keep reducing the foreign shareholding in the company to less than 50 per cent in order to comply with the RBI norms for conversion to a bank.
The RBI in its guidelines on banking licences had said that a company desirous of conversion into a bank needed to be owned and controlled by resident Indians.
IDFC said that at the time of submission of its application to the RBI for bank licence in July 2013, that the ceiling on foreign shareholding in the company was 74 per cent, while the actual shareholding was around 53.17 per cent. Foreign shareholding as of 6 December 2013 was 51.27 per cent.
IDFC said in case if it did not get a banking licence, the foreign shareholding limit would be be restored to 74 per cent.