Officials of the Department of Economic Affairs and the DIPP were scheduled to meet today to discuss the HDFC proposal. However, the proposed meeting was cancelled.
The FIPB is likely to reject HDFC Bank proposal to allow further foreign holding as it would cross the 74 percent sectoral ceiling, officials sources said.
"There is no further space to increase foreign investment in the bank. So, FIPB is unlikely to approve the proposal," they said.
Officials of the Department of Economic Affairs and the DIPP were scheduled to meet today to discuss the HDFC proposal. However, the proposed meeting was cancelled. "The Department of Economic Affairs had convened a meeting on the matter. It was cancelled," they said.
The meeting was scheduled to decide whether the 22.64 percent stake in HDFC Bank of parent HDFC Ltd is foreign investment or not. HDFC Bank had approached the Foreign Investment Promotion Board (FIPB) in the latter half of 2013 to increase the foreign holding in the bank to 67.55 percent from 49 percent.
According to sources, if the proposal of the bank to raise foreign investment to 67.55 percent is accepted, it would exceed the cap of 74 percent, after taking into account parent HDFC Ltd's stake.
As per the existing guidelines, the foreign holding in the bank cannot exceed 74 percent. HDFC Ltd, which is 75.71 percent owned by FIIs, and associate companies, hold 22.64 percent in HDFC Bank. Their
investments in HDFC Bank were made before 2009, when the government came out with norms to calculate the level of foreign investment in companies.
"Downstream investment by HDFC Ltd prior to 2009 in HDFC Bank would be deemed as FDI in case there is any change in the shareholding pattern after the cut-off year," they said.
Last week, FIPB did not take up HDFC Bank's proposal. HDFC Bank had approached the Foreign Investment Promotion Board (FIPB) in the latter half of 2013 to increase the foreign holding in the bank to 67.55 percent from 49 percent.
HDFC Bank stock price
On April 29, 2014, HDFC Bank closed at Rs 715.90, down Rs 9.4, or 1.3 percent. The 52-week high of the share was Rs 760.50 and the 52-week low was Rs 528.00.
The company's trailing 12-month (TTM) EPS was at Rs 35.34 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 20.26. The latest book value of the company is Rs 186.31 per share. At current value, the price-to-book value of the company is 3.84.
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