Axis Bank to be 'foreign-owned' after hike in overseas investment
New Delhi: Axis Bank will become a "foreign- owned" lender, to be governed by FDI policy, following the go- ahead to its proposed increase in foreign investment holding to 62 percent, entailing inflow of over Rs 6,200 crore.
The proposal, recently cleared by the Foreign Investment Promotion Board, now requires go-ahead from the Cabinet Committee on Economic Affairs as it envisages investment of over Rs 1,200 crore.
The lender seeks to raise foreign investment holding from the existing 49 percent to 62 percent.
Following the hike in stake by foreign investors the bank will become foreign-owned, whereby every future investment in seven subsidiaries will be governed by the FDI policy, according to sources.
As per the FDI policy, downstream investment by an Indian company, "which is not owned and/or controlled by a resident entity/ies into another Indian company would be in accordance or compliance with the relevant sectoral conditions on entry route".
The bank's seven subsidiaries are Axis Capitals, Axis Finance Pvt Ltd, Axis Private Equity ltd, Axis Trustee Services Ltd, Axis Asset Management Company, Axis Mutual Fund Trustee Ltd and Axis UK Ltd.
As of June this year, foreign institutional investment (FII) holding in the bank was 40.7 percent, while global depository receipts (GDRs) total 8.08 percent.
The proposal to raise foreign investment limit by 13 percent would attract inflows of Rs 6,265.76 crore (around USD 1 billion), sources said.
The promoters of the bank are Life Insurance Corporation, General Insurance Corporation, New India Assurance, National Insurance Company and Administrator of Specialised Undertaking of the Unit Trust of India.
Sources said that further increase in the foreign investment limit in the bank was sought as there is no headroom for further FII investment as it has already reached the 49 percent mark.
Axis Bank scrip closed at Rs 1,097.70, up 6.63 percent, on the BSE in the last trading session.