Finance Ministry, DIPP to meet on HDFC Bank FDI proposal on April 29

NEW DELHI: Officials of the Finance Ministry and the DIPP will meet on April 29 to deliberate on the proposal to raise the overseas shareholding limit in HDFC Bank.

The meeting of senior officials of the Department of Economic Affairs and the Department of Industrial Policy and Promotion (DIPP) would examine the bank's proposal and decide on whether the 22.64 per cent stake of parent entity HDFC Ltd is foreign investment or not, sources said.

According to sources, if the proposal of the bank to raise foreign investment to 67.55 per cent is accepted, it would exceed the cap of 74 per cent, after taking into account parent HDFC Ltd's stake.

HDFC Ltd, which is 75.71 per cent owned by FIIs, and associate companies hold 22.64 per cent in HDFC Bank. Their investments in HDFC Bank were made before 2009, when the government came out with norms to calculate the level of foreign investment in companies.

"Downstream investment by HDFC Ltd prior to 2009 in HDFC Bank would be deemed as FDI in case there is any change in the shareholding pattern after the cut-off year," they said.

Last week, FIPB did not take up HDFC Bank's proposal. HDFC Bank had approached the Foreign Investment Promotion Board (FIPB) in the latter half of 2013 to increase the foreign holding in the bank to 67.55 per cent from 49 per cent.