Approval from RBI to Route One to increase its stake in IndusInd Bank up to 10%


The bank shares rose to 1.61% to close at Rs 522.20 on the BSE. The bank shares rose to 1.61% to close at Rs 522.20 on the BSE. Root One Investment Company currently holds about 4.96% stake in IndusInd Bank. The bank’s board on July 5 approved the proof ROIC private bank to increase the stake in Route One.

Private domain lender IndusInd Bank on Friday said the Reserve Bank of India (RBI) has allowed one of its existing shareholders, Route One Investment Company LP USA (ROIC), to increase its stake in IndusInd bank to 10 per cent. Route One had approached the Reserve Bank of India in wake of seeking a prior approval to raise the bar of their stake in the bank up to 10%, with accordance to the RBI guidelines. Route One currently holds about 4.96 per cent stake in the bank. Shares of the bank rose 1.61 per cent to close at Rs 522.20 on the BSE.

Approval has to be taken from RBI to increase stake in the private bank

IndusInd Bank said that ROIC had sought RBI approval before increasing its stake in the bank. This approval was sought under RBI’s Master Direction in case of approval before buying shares of ROIC private bank. The bank’s board approved a proposal to increase the stake of Route One in a meeting of 5 July 2020.

Bank shares hit a high of Rs 536.10

IndusInd Bank said that RBI has also forwarded a copy of the letter sent to ROIC to the bank. In this letter, ROIC has been allowed to raise up to 10% of the paid-up voting equity capital of IndusInd Bank. The bank’s shares rose 1.61 per cent to close at Rs 522.20 on the BSE. Bank shares made a low of Rs 500 and an upside of Rs 536.10 in day trading. The shares of the bank are trading at Rs.525 on the BSE, 2%, up from its pre-existing closing rate.

This investment would help the bank to increase the numbers of its capital adequacy from 15.04% at the end of the March quarter. Due to the raging COVID-19 situation, the Indians banks are stocking up their provisions and are looking forward to hitting the debt markets and equity with bolster capital. However, earlier in 2020 Hinduja Brothers, the promoters of the bank had proposed to raise their stake in the bank from 15% to a notable rise of 26%.

In June the promoters had expressed their interest in buying the shares from open market to reach 15% shareholding and stay within the confines, the RBI has set. However, the request was effectively declined by the RBI confirmed a Bloomberg report of June. In a decisive outcome, the board of directors of the IndusInd Bank on 5th July granted their approval to the proposed acquisition. The decision was taken after a reference from the RBI.

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