Moneycontrol Bureau
Shares of Kotak Mahindra Bank gained more than 2 percent intraday Monday after the Foreign Investment Promotion Board raised foreign investment limit in the lender to 55 percent from 49 percent.
Earlier this year, Kotak's application was rejected twice as FIPB was awaiting comments from the Department of Financial Services (DFS), which was expected by June-end. FIPB is headed by Finance Secretary Rajiv Mehrishi.
The issue cropped up because of the merger of Kotak Mahindra Bank and ING Vysya.
The FIPB has amended insurance rules that were issued on February 19 and it has now stated that any indirect foreign equity will not be counted for calculation of ownership.
The bank has stake in two insurance companies. Foreign investors can hold up to a maximum of 49 percent in insurance companies. The main issue is if the bank is considered foreign, then its subsidiaries will be 100 percent foreign owned, which will be a breach of law.
Meanwhile, Kotak Mahindra Bank's shareholders, on June 29, approved issue of bonus shares in the ratio of one share for every one share held. The record date is fixed as July 9 for allotment of bonus shares.
At 09:25 hours IST, the scrip of Kotak Mahindra Bank was quoting at Rs 1,449.30, up Rs 21.40, or 1.50 percent on the BSE.
Posted by Sunil Shankar Matkar
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