IndusInd Bank Ltd shares climbed as much as 6.5% in intra-day trade on Tuesday after a media report said that the promoter Hinduja Group has asked the Reserve Bank of India (RBI) for permission to raise its stake in the private lender.
IndusInd Bank shares touched a high of Rs 707.45 in the morning session, but later pared gains to trade at Rs 668.80, up 0.7% from their previous close, at 11:42 am on BSE. The stock has fallen over 43% in the last one month compared with a 23% fall in the benchmark Sensex.
IndusInd Bank, founded by Hinduja brothers, is seeking relaxation in rules to raise promoter stake in the lender from the mandated 15% to 26%, similar to the relief granted to Uday Kotak recently in the case of Kotak Mahindra Bank, according to a report in Economic Times.
According to RBI’s bank licensing rules, a private bank’s promoter needs to pare its holding to 40% within three years, 20% within 10 years and to 15% within 15 years of getting the banking licence. IndusInd got its banking licence in 1994.
RBI recently allowed Uday Kotak, promoter of Kotak Mahindra Bank, to hold a 26% stake as long as the bank didn’t raise capital from a share sale to outsiders or on a rights basis. However, Kotak’s voting rights were restricted to 15% of the capital starting April 2020.
“We have just recently written to the RBI to increase shareholding from 15% to 26%,” the report quoted Ashok Hinduja, chairman of the Hinduja Group of Companies (India), as saying. “When I saw that Kotak Mahindra Bank has got a dispensation, we also thought of writing to them. Why not give us that dispensation as well? Let’s see how they respond.”
IndusInd Bank shares have been under pressure of late following concerns about the bank’s health after the Yes Bank debacle. CEO Romesh Sobti had recently written to investors that rumours about the health of the bank were unfounded and that IndusInd “remains focussed on building scale with profitability, on a platform of strong capitalisation/liquidity and high credit ratings”.