RBI allows foreign investors buy stake in Kotak Mahindra Bank

The Reserve Bank of India (RBI) is allowing investors to buy a stake in Kotak Mahindra Bank as foreign shareholding in the private bank has come below the prescribed limit. Under present rules, foreign direct investment limit in private sector banks is 74%, however, the government is considering increasing the foreign direct investment (FDI) limit in private banks to 100%.

: The Reserve Bank of India has allowed overseas investors to buy stake in Kotak Mahindra Bank as foreign shareholding in the private bank has come below the prescribed limit.The aggregate shareholdings of foreign investors through global depository receipts, FDI (foreign direct investment), FII (foreign institutional investment) and NRIs, among others, in Kotak Mahindra Bank has gone below the prescribed limit stipulated, the RBI said in a release."Hence the restrictions placed on the purchase of shares of the above bank are withdrawn with immediate effect", the RBI said.As per data available on BSE, the promoter held a 33.73 per cent stake in the bank as of December 2015. Public shareholding was at 66.27 per cent at December-end.Separate data regarding foreign shareholding was not provided.Under the existing rules, foreign direct investment limit in private sector banks is at 74 per cent. However, government is considering to increase the foreign direct investment (FDI) limit in private banks to 100 per cent.FIIs, NRIs and PIOs (persons of Indian origins) can invest in primary and secondary capital markets in India through PIS.The RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis and has fixed the cut-off points two percentage points lower than the actual ceiling.Shares in Kotak Mahindra Bank, on Wednesday, ended 1.35 per cent higher at Rs 659.70 apiece on the BSE, whose benchmark Sensex index finished up 0.55 per cent.