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HDFC Bank proposal still on hold

img_0054Aditya Puri, MD and CEO of HDFC Bank said the government has still not taken any decision about the bank’s FDI proposal. Puri earlier met dinance secretary Arvind Mayaram on this account. The banbk’s proposal for increasing foreign holding in the bank to 67.55% from 49% was first listed on the agenda of the FIPB in November 2013. However, the proposal could not be taken up because the Department of Industrial Policy and Promotion (DIPP), the nodal agency for framing FDI policy, has been arguing that any increase in foreign shareholding would result in breach of the FDI guidelines. FIPB, headed by the economic affairs secretary, is the nodal body for approving FDI. Other authorities involved in vetting the proposal include RBI, DIPP, DEA and the law ministry. The law ministry has suggested that the DEA and the DIPP, a wing of the industry ministry, take a view on the proposal. According to sources, if the bank’s proposal is accepted, it would exceed the cap of 74%, after taking into account parent HDFC’s stake. HDFC holds 22.64% stake in the bank and the DEA and DIPP are deliberating whether that investment is foreign investment or not. FIIs hold 75.7% in HDFC.

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