FII investment in private banks

By Our Banking Bureau | 20 Mar 2002

1
Mumbai: Minister of State for Finance Balasaheb Vikhe Patil told the Rajya Sabha that the portfolio investment by foreign institutional investors (FIIs) in private sector banks will be outside the foreign direct investment (FDI) limit of 49 per cent.

This means that technically, FII investment alone in a private sector bank can go up to 49 per cent, provided the higher investment limits are approved by the banks board and its shareholders.

The Reserve Bank of India had last month announced a hike in the FDI cap for private sector banks from 20 per cent of the equity capital to 29 per cent. But the maximum voting rights for a shareholder was capped at 10 per cent of the total voting rights of the bank.

In a couple of private sector banks, FDI is close to 49 per cent. In the case of state-owned banks, foreign investment, including FDI and portfolio, has been limited to 20 per cent.

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