Axis Bank seeks to raise foreign shareholding

India's third-largest private sector lender Axis Bank Ltd has submitted an application seeking permission from the Foreign Investment Promotion Board (FIPB) to increase the foreign shareholding limit in the bank.

The move comes just days after the Reserve Bank of India (RBI) notified the bank that the foreign shareholding in the bank has crossed the 49-per cent threshold and no additional purchases would be allowed.

''The foreign shareholding by Global Depository Receipt (GDR), American Depository Receipts (ADR), Foreign Direct Investment (FDI), Non-Resident Indian (NRI), Persons of Indian Origin (PIO), Foreign Institutional Investors (FIIs) in Axis Bank has crossed the overall limit of 49 per cent of its paid-up capital and no further purchases of shares of the bank would be allowed through stock exchanges in India on behalf of GDR, ADR, FDI, NRI, PIO, FIIs,'' the RBI notification said.

The foreign shareholding in Axis Bank as of 30 June was 48.96 per cent, which includes FDIs in the form of GDRs of 8.08 per cent and other overseas holdings, including that of FIIs, of 40.88 per cent.

"The bank has filed an application with the Foreign Investment Promotion Board for increasing the foreign shareholding limit," Axis Bank said in an announcement to the National Stock Exchange (NSE) yesterday.

The bank has not indicated the upper limit it is looking for.

Other private sector banks such as Yes Bank also had breached the 49 per cent foreign shareholding limit.

In June, it received the approval from the Cabinet Committee for Economic Affairs (CCEA) to raise around Rs2,650 crore from qualified foreign investors, which will enable the bank to increase foreign equity participation up to 60 per cent.

Yes Bank had received FIBP approval in April. However, it further required the CCEA approval as the investment involved was over Rs1,200 crore, which was above the board's ambit.

Mumbai-based Axis Bank is the country's third-largest private lender after ICICI Bank and HDFC Bank. The bank has a network of more than 2,000 domestic branches and extension counters, and around 11,500 ATMs across the country. It also has offices in the UK, Singapore, Hong Kong, Shanghai, Colombo, Dubai and Abu Dhabi.

The bank reported revenue of Rs33,734 crore for the year ended March 2013, up 23 per cent from the previous year. Net profit also jumped 22 per cent to Rs5,179 crore during the period.

Close on the heels of the country's second-largest private sector lender HDFC Bank, yesterday Axis Bank also raised its base lending rate by 25 basis points to 10.25 per cent.

Banks have been forced to revise their base rates to save the rapidly falling rupee, which tumbled to a record low of 64.11 against the US dollar yesterday.