Axis Bank gets cabinet nod to hike foreign stake to 62%

The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Axis Bank Ltd for increasing foreign investment in the bank from 49 per cent to 62 per cent.

The approval is subject to the condition that the holding of foreign institutional investors in the bank does not exceed 49 per cent of the paid-up equity share capital of the bank.

The approval would result in foreign investment of about Rs7,250 crore in the country, an official release said.

Axis Bank's proposal for raising foreign equity holding was referred by the Foreign Investment Promotion Board to CCEA as the proposal involved foreign direct  investment of above Rs1,200 crore.

Axis Bank, the third-largest private lender in the country, sought to hike foreign equity limit after the Reserve Bank of India banned fresh purchases by foreign investors in the bank in order to keep foreign stake within the existing sanctioned limit of 49 per cent.

As of 30 June 2013, foreign shareholding in Axis Bank stood at 48.96 per cent. This included foreign direct investment (FDI) in the form of global depository receipts of 8.08 per cent and other foreign holdings, including investments by foreign institutional investors of 40.88 per cent.

Under the current FDI policy, foreign shareholding in private sector banks is allowed up to a ceiling of 74 per cent of the paid-up voting equity capital.