Foreign investors can buy up to 74% stake in Federal Bank

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With the increase in foreign investment limit in Federal Bank to 74 per cent, foreign investors will be allowed to purchase stake in the private bank, RBI said today.

Federal Bank has been removed from the ban list and the restrictions placed on the purchase of shares have been withdrawn with immediate effect, the apex bank said.

"Equity shares of Federal Bank Ltd, can now be purchased through primary market and stock exchanges," RBI said in a notification.

The restrictions were removed as government approved increasing foreign investment in Federal Bank from 49 per cent to 74 per cent for its paid up equity share capital.

"... The aggregate shareholding through Foreign Institutional Investors (FIIs)/Non-Resident Indians (NRIs)/Persons of Indian Origin (PIOs)/Foreign Direct Investment (FDI)...In Federal Bank has gone below the prescribed threshold ban limit stipulated under the extant FDI policy," RBI added.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS.

However, RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.

To effectively monitor the limit, RBI has fixed cut-off points two percentage points lower than the actual ceiling.

Shares of Federal Bank today closed at Rs 85.95 apiece on the BSE, up 2.26 per cent from the previous close.

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