FIPB lets Kotak Bank up foreign investment limit to 55%

Kotak Mahindra Bank’s proposal to raise <g data-gr-id="21">foreign</g> investment limit in the lender to 55 <g data-gr-id="27">per cent</g> was cleared by the Foreign Investment Promotion Board (FIPB) on Friday.

After deferring a decision on the proposal in the past, the FIPB cleared the application during Friday’s meeting after the Department of Financial Services gave its opinion on the matter, sources said.

The FIPB is headed by Finance Secretary Rajiv <g data-gr-id="22">Mehrishi</g>. Kotak Bank had approached the Board after the Reserve Bank barred overseas investments in it as foreign shareholding hit the permissible threshold following the merger of ING Vysya Bank with Kotak Bank. Investments from FIIs, FPIs and foreign banks had reached 48.55 per cent in the merged entity.

The clearance comes days after Kotak Bank’s shareholders gave approval for <g data-gr-id="20">issuance</g> of bonus shares. The annual general meeting of the bank held on June 29 had approved issuance of “bonus shares in the proportion of one equity share for every equity share of face value Rs 5 held by such person on the record date.” 

In February 2003, Kotak Mahindra Finance Ltd, the group’s flagship company, was given the licence to carry on banking business by the RBI. Kotak Mahindra Finance Ltd. is the first company in Indian banking history to convert to a bank.