HDFC Bank red-flagged as foreign holding nears max limit

Mumbai: HDFC Bank, India’s largest lender by market value, is back in the caution list of depositories for foreign investment – the first time in over a year. On November 9, the National Securities Depository (NSDL) put HDFC Bank stock on the so-called Red-Flag list after the total foreign holding in the lender crossed 71%. The maximum permissible foreign holding in the bank is 74% according to the Reserve Bank of India (RBI) rules. According to November 11 data, foreign portfolio investors’ holding in HDFC Bank was 71.16%. Overseas investors still have headroom to buy up to 15 crore shares of the bank.Red-flag in terms of foreign investment limit serves as a word of caution to the foreign investors making fresh purchases in the stock about the risks involved in such a purchase. If any such purchase is made beyond the permissible limit, which is 74% in the case of HDFC Bank, FPIs will be liable to sell the excess shares to domestic investors. For now, FPIs will still be able to buy fresh shares of HDFC Bank.If the limit crosses 74%, HDFC Bank will be put under the Breach List, where no new FPI purchases will be allowed. But FPIs would be allowed to buy shares of the bank from other FPIs.HDFC Bank shares have rallied over 28% since September 24. Market participants say HDFC Bank shares benefit both from active and passive dollar flows. Foreign portfolio investors have net purchased shares worth roughly Rs 1,28,000 crore since May.

from Economic Times https://ift.tt/2GVLybQ