RBI allows LIC to double its IndusInd Bank stake to 9.99%

The Hinduja Group-owned IndusInd Bank in a regulatory filing on stock exchanges said it received an intimation in this regard from the central bank on Thursday.

The RBI approval is subject to compliance with its direction on ‘Prior approval for acquisition of shares and voting in private sector banks’ issued in 2015, which made prior approval from the central bank mandatory for any individual or entity to hold 5% or more stake in a private sector bank.

The nod is also subject to compliance with guidelines and regulations of market watchdog Securities and Exchanges Board of India (Sebi) and any other regulatory norms.

Email queries to LIC and IndusInd did not elicit any response as of press time Friday.

The RBI had last month accepted most of the recommendations of its working group on corporate ownership of private sector banks. They included allowing unrestrained promoter shareholding in the first five years of operations, increasing the cap on promoter holding after 15 years to 26% from 15%, and an increase in the initial capital requirement. The central bank had also clarified that any stake holding or voting rights of 5% or more will require its prior nod.

IndusInd International Holding Ltd, the promoting entity of IndusInd Bank, has already signalled that it is readying more than $1 billion to raise its ownership of the bank to 26% of total equity.

At present, the promoters own 16.54% in IndusInd Bank.

Once the operational guidelines are in place, the promoters will raise the money in two to three months to enhance their stakes in multiple tranches to 26%. Overseas funds collectively own more than 51% stake in IndusInd Bank.