Kotak Mahindra Bank seeks FIPB nod to hike foreign holding to 55 per cent

Kotak Mahindra, the private sector bank, is seeking FIPB approval to hike foreign investment in the entity to 55 per cent as the RBI has restricted more investments after they hit the permissible threshold.

Foreign investors can acquire up to 49 per cent stake in Indian lenders through automatic route, but beyond that requires the nod of FIPB, headed by the Economic Affairs Secretary in the Finance Ministry.

At present, foreign investors, including FIIs, FPIs and foreign banks together hold 48.55 per cent in the bank pursuant to its merger with ING Vysya Bank.

Reserve Bank of India (RBI) has disallowed further foreign investments as "the aggregate foreign shareholding in Kotak Mahindra Bank has reached the threshold limit," the central bank said in a statement today.

The Kotak Bank on Tuesday alloted 13.92 crore shares to the shareholders of ING Vysya completing the merger process, following which the foreign shareholding soared to 48.55 per cent.

"Kotak Mahindra Bank's application for an approval to increase the aggregate ceiling on foreign investment to 55 per cent is currently under the consideration by the FIPB," Kotak Bank said.

Out of the 48.55 per cent holding of foreign investors, FIIs hold 33.46 per cent, foreign portfolio investors hold 2.43 per cent, foreign bodies 8.11 per cent and foreign banks 3.60 per cent.

In November, Kotak Mahindra Bank had announced the acquisition of mid-sized private sector ING Vysya Bank in an all-share deal worth Rs 15,000 crore.

As part of the deal, 725 equity shares of Rs 5 each (face value) of Kotak Mahindra were to be issued for every 1,000 shares of Rs 10 each held in ING Vysya Bank.