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Paving the way for inflow of over Rs 7,000 crore foreign capital, the government on Thursday cleared a proposal by the country’s third largest private sector lender — Axis Bank to increase its foreign investment to 62 per cent.
“The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from 49 per cent to 62 per cent,” said an official release, adding that it would result in foreign investment of about Rs 7,250 crore in the country.
The approval is subject to the condition that the overall holding by foreign institutional investors does not exceed 49 per cent of the paid up equity share capital of the bank.
In effect, following the CCEA approval, Axis Bank is expected to become foreign owned and all future investments by its subsidiaries will be government by the foreign direct investment policy.
The bank had in September received clearance from the Foreign Investment Promotion Board after the RBI banned fresh purchases by foreign investors after foreign stake breached the sanctioned limit of 49 per cent.
For the quarter ending September 2013, the FII holding in the bank is 43.37 per cent while global depository receipts held another 4.54 per cent stake. For the quarter ending June 2013, the FII stake was 40.7 per cent while GDRs held another 8.08 per cent stake. Axis Bank’s shares rose by 15.55 per cent on the BSE to close at Rs 1,298.20.