FDI: Chanda Kochhar hails full fungibility for private lenders

Mumbai: ICICI Bank, which is majority-owned by foreigners, has welcomed the government's decision to remove sub-limit restrictions within the overall sectoral limit of 74 percent for private sector lenders.

Welcoming the government move, ICICI Bank managing director and chief executive Chanda Kochhar in a statement said, "The decision to remove the sub-limit restrictions within the overall limit of 74 percent for private sector banks will provide greater flexibility to banks and investors."

"I welcome the government decision to ease foreign investment norms in 15 sectors. The move is in line with the ongoing reform process and its objective of enhancing the ease of doing business," she said.

Private sector lenders like ICICI Bank, HDFC Bank, Axis Bank, Federal Bank, Yes Bank among others have high foreign ownership. There was a time when the previous government was toying with the idea of technically declaring ICICI Bank and HDFC Bank as foreign entities as they were owned by foreigners at around 74 percent. Still all these banks have very high foreign holdings.

In the private banking sector, the government has introduced full fungibility of foreign investment and accordingly, "FIIs/FPIs/QFIs, following due procedure, can now invest up to sectoral limit of 74 percent, provided there is no change of control and management of the investee company", the government said on Tuesday.

Earlier, portfolio investment was permitted up to 49 percent.