In another move to bolster the Indian banking system, the Union Cabinet on Wednesday approved a Rs 24,000 crore foreign direct investment (FDI) as additional share capital into private sector HDFC Bank, Finance Minister Piyush Goyal announced.
Briefing reporters here following a cabinet meeting, Goyal said that with this additional FDI foreign equity in HDFC Bank would continue to remain within the mandatory cap of 74 per cent.
“Even with this infusion, the foreign equity will remain capped below 74 per cent.
“The current 72.62 percent foreign equity holding is being raised to 74 per cent with this Rs 24,000 crore FDI,” he said.
Goyal also said the bank’s capital adequacy ratio would be strengthened in this way, and it had also indicated its intent to expand both its physical branches network as well as its digital banking reach.
On the other hand, the profitability of state-run banks has been hit hard in recent times owing to the provisioning required to be made on account of their accumulated non-performing assets (NPAs), or bad loans.