IndusInd Bank shares continued to trade higher on Monday albeit sharply off from the day's high amid reports of high-level management exits in related firms. The gains came after the Reserve Bank of India's (RBI) move on Friday to allow promoters to own up to 26 percent in private sector lenders.
On Friday, the RBI approved most recommendations by an internal working group, including allowing raising of promoter holding. The move is likely to benefit IndusInd Bank, which has been seeking more time from the central bank to divest its stake.
At 11:45 am, IndusInd Bank shares were up 0.8 percent at Rs 908.8 apiece on BSE, having risen as much as 6.1 percent earlier in the day. The stock traded with high volume, as nearly three lakh shares changed hands so far on Monday as against a daily average of two lakh in the past two weeks.
Earlier, the Hindujas, who had applied to the RBI to increase their holding in Indusind Bank, welcomed the central bank's move. IIHL Mauritius, the Hindujas' entity which is the promoter of IndusInd Bank, had applied to the central bank RBI to increase its holding to 26 per cent from the previous cap of 15 per cent.
As of September 30, the promoter group held a 16.54 percent stake in IndusInd Bank. IIHL owned 12.6 per cent and IndusInd Ltd 3.94 per cent.
"Of course, ownership was an overhang as well. The warrant conversion during the last cycle itself took its own sweet time. They needed some RBI forbearance there. But having said that, I don’t think ownership necessarily takes away all the risk from IndusInd Bank from an operational perspective right now," he told CNBC-TV18.
The RBI constituted the working group on June 12, 2020 which submitted its report on November 20, 2020, inviting comments of stakeholders and members of the public by January 15, 2021.
The regulator also accepted the recommendation that no changes be made to the extant instructions related to the initial lock-in requirement of holding a minimum 40 per cent of the paid-up voting equity share capital of the bank for the first five years. It, however, stated no cap on promoter holding during the period.
In a separate development, Shalabh Saxena and Ashish Damani resigned as CEO and CFO of IndusInd Bank unit Bharat Financial Inclusion respectively. Both Saxena and Damani offered their assistance in the ongoing transaction review of BFIL.
IndusInd nominated J Sridharan as Executive Director on the BFIL board, and appointed Srinivas Bonam to oversee the day-to-day functioning of the company.
(Edited by : Ajay Vaishnav)
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