IDFC not eligible for bank licence as foreign holding exceeds 50%
Infrastructure financing firm IDFC, which has applied to RBI for a bank licence, today said it is not eligible to obtain one as foreign
New Delhi: Infrastructure financing firm IDFC, which has applied to RBI for a bank licence, today said it is not eligible to obtain one as foreign shareholding in the institution exceeds the permissible limit of 50 per cent and is working to meet the norms.
IDFC said in a BSE filing that the institution would endeavour to bring down the foreign shareholding to below 50 per cent in case it gets bank licence from the RBI.
IDFC is one of the 25 applicants for new bank licence, which have applied for a bank licence under the RBI’s guideline on ‘Licensing of New Banks in Private Sector’ issued in February. The licences are likely to be issued next year.
“The Board of Directors on December 19, passed a circular resolution approving postal ballot process for seeking an enabling resolution from the shareholders to authorise the board…to keep reducing ceiling limit of the foreign
shareholding from existing 54 per cent to 49.9 per cent in
various stages…,” IDFC said in its filing.
It further said that in case it does not receive the bank licence from RBI, it “will take steps to reinstate the ceiling on the foreign shareholding back up to 74 per cent.
The RBI guidelines require that the eligible promoters of a bank should to be ‘owned and controlled by residents’.
Shares of IDFC declined by 2.21 per cent to Rs 103.90 per share on the BSE.
IDFC said that at the time of submitting its application to the RBI for bank licence in July, the ceiling on shareholding of FIIs, FDI, NRI and OCBs in the institution was 74 per cent, while the actual shareholding was around 53.17 per cent. As on December 6, the actual foreign shareholding was around 53.17 per cent.
It further said that while making the application to the RBI, the financial institution had “undertaken to limit the ceiling of the foreign shareholding to below 50 per cent if IDFC were to get banking licence.” It had obtained the shareholders approval on July 29 to restrict the foreign shareholding ceiling to 54 per cent from earlier level of 74 per cent.
Initially, 26 entities evinced interest in entering the banking arena. Tata Sons, the holding company of Tata group, withdrew its application last month leaving 25 players in the fray.
Public sector units India Post and IFCI, private sector Anil Ambani Group and Aditya Birla group submitted applications on July 1.
In the past 20 years, the RBI licensed only 12 banks in the private sector in two phases. Ten banks were licensed on the basis of guidelines issued in January 1993.