ICICI Bank, HDFC Bank not Indian-owned: Govt
The government had announced new FDI norms last year that say that if indirect FDI in an Indian company exceeds 50%, its investment in subsidiaries will be treated as foreign investment
The government today said that ICICI Bank and HDFC Bank cannot be called ‘Indian-owned’ banks, setting at rest the debate generated over the nationality of the top two private sector lenders, reports PTI.
“At best, these two can be called as Indian-controlled banks,” DIPP secretary RP Singh said today when asked about the government’s stance in the wake of the two seeking clarifications on the matter.
“ICICI Bank managing director & CEO (Chanda Kochhar) met me day before yesterday, she has discussed (the issue) with me,” Mr Singh said.
ICICI Bank had maintained that it continues to be an Indian bank as both its management and board were Indian.
However, both ICICI Bank and HDFC Bank have over 74% foreign holding, including that of foreign banks and overseas institutional investors.
“Banks will be covered in one paper which we are trying to bring out on the financial aspects totally,” Mr Singh said, referring to the six discussion papers on FDI that the Department of Industrial Policy and Promotion is planning to bring out soon.
“You know the definition of what is a company controlled by Indians and what is the definition of a company owned by Indians,” Mr Singh said.
Going by the definition, both entities are certainly banks not owned by Indians, because equity of at least 74% or around 74% is from outside, he pointed out, buttressing the government's stand.
But they can be construed as banks controlled by Indians if the majority of directors are Indians and right to directorship is with Indians. So depending upon that, both banks are construed as banks controlled by India, but they can certainly not be called banks owned by Indians.
“There is a way of resolving their problem. We will try to find a solution for that. The handicap they are suffering, we will try to resolve,” Mr Singh said.
The banks’ claim that they are Indian is significant in the light of the government announcing new FDI norms last year that say that if indirect FDI in an Indian company exceeds 50%, its investment in subsidiaries will be treated as foreign investment.
Moreover, in calculating indirect foreign investment in an Indian entity, the sum total of FDI, stake from Non-Resident Indians, American and Global Depository Receipts, foreign currency convertible bonds and convertible preference shares will be taken into account.
Both ICICI Bank and HDFC Bank have insurance ventures, where FDI is capped at 26%.
Comments
Dillip kumar swain
1 decade ago
Sir,
maximum indians belives both are indian banks.but they are likely city,stanchat & hsbc bank. so they are looting indians through L.I./ M.F.s .
Reply
K NARAYANAN
1 decade ago
Let them be globally owned and locally managed.But what our Govt agencies like RBI and finance mininstries are doing.They are law unto themselves and care a damn for RBI regulations.RBI says issue pass books for saving accounts -are they doing.RBI will say no complaint recd.You want me to write to RBI and Ombudsman to solve the problem.They are at liberty to fix the minimum balance -no questions to be asked and they can give loan left,right ,centre and employ rogues and thugs to recover the loans like the money lenders.They care a damn for Supreme court ruling.In every sense they behave like foreign banks-like citi bank for example.They loot the public and the MD is paid fabulous salary.They are private-no one shd interfere.But when there was run on ICICI bank the RBI and MrChidambaram the then finance minister had to intervene frequently.Efficiency at what and at whose cost.There are many issues other than who owns -let the Govt rein in the banks from doing what they want.Because they have freedom to loot, foreigners are happy to invest and loot tho capital appreciation allowing local mgt to facilate the job.
Reply
R Balakrishnan
1 decade ago
With so much of foreign investments and debts outstanding, is not India itself foreign owned??
What does it matter who owns? If Indians have the money, they will build businessess. Otherwise, let the foreign money in. What seems to be RBI's problem??
Reply
