IDFC falls 9% as RBI cuts FII limit to 54% in company

Moneycontrol Bureau

Shares in IDFC fell 9 percent intraday Monday as the Reserve Bank of India notifed to decrease the foreign institutional investor (FIIs) limit in the company to 54 percent from 74 percent.
"Foreign investors can buy only 54 percent of IDFC's shares, down from 74 percent earlier through primary market and stock exchanges," RBI said in a press release.
The company has asked all custodian banks not to make any further purchases through secondary market on behalf of their FII and NRI clients with immediate effect. It had send an e-mail on August 26 to stop purchases. Also read: VIP Industries soars 12% post Rakesh Jhunjhunwala ups stake
As IDFC has applied for a banking license, hence this was a technical clarification by RBI not to increase the FII investment higher than 54 percent.
Meanwhile, CLSA has a buy rating on the company as it focuses on lending to better rated corporates. The brokerage says that it refinancing will driving growth while asset quality is stable and bank license will help diversify operations.
At 14:19 hrs IDFC was quoting at Rs 95.95, down Rs 7.55, or 7.29 percent on the BSE.