Axis Bank gets nod to raise foreign equity holding to 62%
Dec 26 2013 , New Delhi
With the hike in foreign investment, Axis Bank will become a foreign bank, which means any future investment in the bank or seven of its subsidiaries in different financial businesses will be on the basis of the FDI rules and regulations.
The bank’s seven subsidiaries are Axis Capital Markets, Axis Finance, Axis Private Equity, Axis Trustee Services, Axis Asset Management Company, Axis Mutual Fund Trustee and Axis UK.
The cabinet committee on economic affairs (CCEA) chaired by prime minister Manmohan Singh approved the proposal, which had been pending for nearly five months.
The CCEA nod is subject to the condition that the total holding of foreign institutional investors in the bank did not exceed 49 per cent, an official statement said.
After the CCEA decision, the government will have little room to divest the 20.71 per stake that SUUTI holds in the bank to FIIs. The Life Insurance Corporation of India (LIC), which already holds 9.33 per cent in Axis Bank as one of the promoters, also now have limited room to buy those shares from SUUTI.
Apart from holding 20,71 per cent stake in Axis Bank, SUUTI holds 11.54 per cent in ITC and 8.3 per cent in L&T. The government holding in these three firms put together is valued at Rs 50,000 crore as per current market prices. The government has been weighing a proposal to sell these stakes in tranches.
The government has proposed to raise Rs 40,000 crore through disinvestment this financial year and an additional Rs 14,000 crore by selling the shares held by it in private companies, which include the shares held by SUUTI and the residual stake in Hindustan Zinc and Balco.