The Cabinet Committee on Economic Affairs today allowed an additional Rs 24,000 crore foreign direct investment into private sector lender HDFC Bank.
That will not result in a breach of the 74 percent cap on overseas investors’ stake in the bank, interim Finance Minister Piyush Goyal told reporters after a Cabinet meeting in New Delhi. The current foreign holding in HDFC Bank is 72.78 percent which is being raised to 74 percent through this infusion, he added.
“The decision would ensure that the composite foreign shareholding in the bank inclusive of all types of foreign investments, both direct and indirect, will not exceed 74 percent of the enhanced paid-up equity share capital of the bank,” the Ministry of Finance said a statement. The investment will be subject to conditions of the FDI policy and other sectoral regulations, the statement added.
Foreign investment of up to 49 percent is allowed in Indian banks without approval but regulatory and government nod is needed if they want to increase it beyond that.
The funds raised will help HDFC Bank improve its capital adequacy ratio and expand its retail and digital footprints, Goyal said.
In 2015, the government had allowed HDFC Bank to raise Rs 10,000 crore from foreign investors.