HDFC gets RBI nod to raise FII limit to 100%

The Reserve Bank of India has notified that HDFC's board has passed resolutions to increase the FII investment limit from 74 per cent to 100 per cent.

The increase in Foreign Institutional Investors (FIIs) investment limit is for the purchase of Housing Finance Development Corporation's (HDFC) equity shares and convertible debentures under the portfolio investment scheme. This move follows the Citigroup selling its entire stake of 9.85 per cent held in HDFC under the Foreign Direct Investment route to investors, primarily FIIs, in February. Consequently, the FII shareholding in the Corporation rose to about 66.7 per cent.

In a notice to the BSE, HDFC said the warrants issued by it in August 2009, representing about 3.57 per cent of the diluted equity share capital, are due for exchange into equity shares on or before August 24, 2012. The exchange of such warrants with equity shares may increase the FII shareholding in the Corporation.

“The gap between the earlier FII investment limit (of 74 per cent) and the actual holding was closing. So, the Board passed an enabling resolution to create more headroom for FII holding,” said a HDFC spokesperson.

HDFC shares closed up 4.38 per cent on the BSE at Rs 662.55 per share as against the previous close of Rs 634.75.