New Delhi, Nov 09: Government has asked Centurion Bank to come out with a rights issue before infusion of Rs 154 crore as foreign direct investment from private equity fund Sabre Capital worldwide INC and other investors.
The Foreign Investment Promotion Board has turned down Centurion Bank's proposal for the Rs 154 crore FDI as it would temporarily take the foreign holding beyond the permissible 49 per cent.
Instead, FIPB has asked the bank to come up with a rights issue or public offer of Rs 65 crore first.
The bank had sought FIPB approval to allow its existing and new investors to bring in a total Rs 219 crore in FDI -- Rs 154 crore in the first tranche and another Rs 65 crore through rights issue in the second tranche -- to tide over its financial difficulties.
The capital infusion would enable the bank to restructure its existing capital and shore up the capital adequacy ratio to beyond 9.0 per cent as stipulated by RBI.
Centurion planned to issue shares under rights or public issue at Rs 4.0 per share, which include a premium of Rs 3.0 per share.
The bank had sought permission to exceed the FDI limit of 49 per cent, subject to the condition that it would comply with the current norms after the rights issue is completed.
Bureau Report