The FIPB on Friday cleared the long-pending proposal of HDFC Bank to hike foreign holding in it bank to 74 per cent.
"FIPB considered and approved HDFC Bank's proposal to raise foreign investment ceiling to 74 per cent," officials said after the meeting of the Foreign Investment Promotion Board.The FIPB is of the view that HDFC Bank' parent HDFC ltd's 22.5 per cent holding in the bank is FDI and hence total foreign holding is 73.2 per cent, which includes FII, FDI, ADR and GDR.
"So, the bank now has little headroom to raise funds from foreign investors," the officials said.Total foreign investment in HDFC Bank was 73.39 per cent at the end of June 2014. It came down to 73.2 per cent at the end of September 2014.
Asked about any possible imposition of penalty by RBI for breaching foreign investment limit by HDFC Bank, sources said it would be decided by the banking sector regulator."It would be looked into by RBI if HDFC Bank had breached the foreign investment limit or not," sources said.