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India’s HDFC Bank Approved to Raise Foreign Investment to 74%

India’s HDFC Bank Approved to Raise Foreign Investment to 74%

The Foreign Investment Promotion Board, a panel of government officials that approves foreign investment in India, allowed foreigners to own as much as 74 percent of HDFC Bank Ltd., the nation’s most valuable lender by market capitalization, paving the way for a 100 billion rupee ($1.6 billion) share sale by the company.

The approval ends the uncertainty over foreign investment ceilings in India’s most valuable bank and prepares the ground for its proposed capital raising. “The government’s decision will allow the lender to proceed with the planned share sale and boost capital ratios to increase lending as the economy revives,” Vishal Narnolia, Mumbai-based banking analyst at SMC Global Securities Ltd. “Although foreign investors hold close to 74 percent stake in the bank as of now, they can invest in the proposed share sale after the rule change,” he said. HDFC Bank, led by managing director Aditya Puri, had a capital adequacy ratio of 15.7 percent as of Sept. 30 and a gross bad-loan ratio of 1 percent, exchange filings show.

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