The Hindu Business Line : HDFC Bank to seek nod to raise borrowing limit

HDFC Bank will seek shareholders’ nod to enhance the ceiling limit for borrowing by its board of directors for the purpose of business activities. A hike in the ceiling limit has become necessary due to an increase in the bank’s business in the recent years.

As against the current borrowing ceiling of Rs 5,000 crore, sources said that plans are afoot to increase the borrowing powers of the board to a sum not exceeding Rs 20,000 crore over and above the aggregate of paid-up capital and free reserves at any time. This is apart from temporary loans obtained from banks and deposits accepted from public, which are repayable on demand.

Sources said that a special resolution to enhance the borrowing powers of the board would be taken up for shareholders’ nod at the forthcoming annual general meeting (AGM) in Mumbai on June 10.

Currently, the Indian Company Law restricts the borrowing powers of the board of directors. Directors of a company cannot borrow monies in excess of the paid-up capital and free reserves without the consent of the company in a general meeting.

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