(Disclosure:I am market making in the shares of Catholic Syrian Bank)
The government on Thursday said it has cleared 23 foreign investment proposals, including that of Catholic Syrian Bank and Bandhan Financial Services, amounting to Rs 10,378.92 crore.
The investment proposals were approved following the recommendation for the same by the Foreign Investment Promotion Board (FIPB), headed by Finance Secretary Rajiv Mehrishi.
Besides, private sector Catholic Syrian Bank has got clearance for raising foreign investment limit in the bank from 49% to 74%. The proposal is worth Rs 1,200 crore. The bank has recently got nod for IPO.-from DNA
Foreign investment in the bank is currently at 30 per cent—19 per cent with individuals and 11 per cent with FIIs. The move from the bank comes as it is preparing for an IPO worth about Rs400 crores.
The firm is expecting support from foreign investors as well as NRIs. The share of foreign companies would be a deciding factor with regard to share prices when the firm goes public.
Out of banks that are based in Kerala, Federal Bank was the first which was able to increase foreign investments to a majority level. The bank, which is now 49 per cent owned by foreign entities, wants to increase that investment level to 74 per cent. South Indian Bank is looking to increase foreign investments in it to 59 per cent and shareholders have approved the move.
Even after foreign investments are hiked in these banks, it would not mean that they would go into foreign hands because that would need foreign majority in the board of directors of the bank, which is a distant possibility.
However, analysts are of the opinion that such a situation could arise if foreign companies are allowed to increase their stake in local firms. In such a case, local small banks could be the first targets for board-level manipulations and subsequent takeovers.-from Manorama