Government gives HDFC Bank's Rs 24,000 crore fund raising plan the green light
Of the additional Rs 24,000 crore, Rs 8,500 crore is proposed to be allotted to HDFC Ltd, the promoter, on a preferential basis
New Delhi: In another move to bolster the Indian banking system, the Union Cabinet on Wednesday approved a Rs 24,000 crore foreign direct investment (FDI) as additional share capital into private sector HDFC Bank, Finance Minister Piyush Goyal announced.
Briefing reporters here following a cabinet meeting, Goyal said that with this additional FDI foreign equity in HDFC Bank would continue to remain within the mandatory cap of 74 percent.
"Even with this infusion, the foreign equity will remain capped below 74 percent.
"The current 72.62 percent foreign equity holding is being raised to 74 percent with this Rs 24,000 crore FDI," he said.
Goyal also said the bank's capital adequacy ratio would be strengthened in this way, and it had also indicated its intent to expand both its physical branches network as well as its digital banking reach.
On the other hand, the profitability of state-run banks has been hit hard in recent times owing to the provisioning required to be made on account of their accumulated non-performing assets (NPAs), or bad loans.
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