HDFC Bank has secured an approval from the Indian government to raise additional capital up to INR240bn ($3.6bn) through foreign direct investment (FDI).
Despite the permission, the government will ensure that the composite foreign shareholding in the bank inclusive of both direct and indirect foreign investments will not exceed 74% of the enhanced paid-up equity share capital of the lender.
“The Union Cabinet has approved the proposal for grant of permission to M/s. HDFC Bank Ltd. to raise additional share capital of up to a maximum of INR240bn, including premium, over and above the previous approved limit of INR100bn, such that the composite foreign shareholding in the bank shall not exceed 74% of the enhanced paid-up equity share capital of the bank,” the government said in statement.
The government added that the proposed investment is expected to boost the capital adequacy ratio of the bank.
In December, HDFC Bank’s board approved a plan to raise INR240bn ($3.6bn) capital through a combination of instruments including preferential allotment to its parent HDFC. HDFC is looking to infuse INR85bn ($1.25bn) in HDFC Bank.