Kerala-based private lender Federal Bank, which recently received the Foreign Investment Promotion Board’s nod to raise foreign holding to 74 per cent, on Monday said it is not seeking any change in the ownership structure.

“We would like to clarify that we have not sought any change in the already existing limit of foreign investment or (even in the existing sub-limits for FIIs up to 49 per cent and NRIs holding up to 24 per cent) in the equity share capital of the bank,” Shyam Srinivasan, Managing Director and CEO, said at a press meet here.

This limit is exactly what was approved by the shareholders’ resolution on February 23, 2006 and the Reserve Bank of India on March 22 that year, he said.

“Our focus area remains organic growth and we are not in any way considering any change in the ownership structure of the bank.”The consolidated FDI policy issued by the Department of Industrial Policy and Promotion on April 5, 2013 stipulated that specific government approval should be obtained for foreign holdings above 49 per cent and up to 74 per cent in private sector banks.

In the light of this policy announcement, Srinivasan said, the RBI had mandated the Federal Bank to seek approval from the FIPB for continuing with its prevailing foreign holding limit. The FIPB approval was, therefore, required to maintain the status quo, he added.

The cap on individual shareholding of 4.99 per cent will remain intact and no shareholder -- domestic investor, FII or NRI -- will be able to acquire stakes in the bank beyond 4.99 per cent without obtaining the approval of the Board of Directors and thereafter of the regulators, Srinivasan said.

“While reports confirm that the FIPB has approved the bank’s application, we are yet to receive the formal communication of the approval,” he added.

sajeevkumar.v@thehindu.co.in

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