Saturday, 1 May 2010

ICICI and HDFC banks are not Indian Banks

According to the Department of Industrial Policy and Promotion (DIPP), the two major banks in India ICICI Bank and HDFC Banks are not Indian owned but are Indian controlled. Their major part of the holding is of foreign origin rather than Indian. But the board is controlled by Indians. But when the ownership is concerned, they no more stand as Indian Banks! They are not more than any other foreign banks like RBS or HSBC when it comes to nationality of the ownership.

Both ICICI Bank and HDFC Bank have over 74 per cent foreign holding, including that of foreign banks and overseas institutional investors. The direct and indirect foreign holdings in ICICI Bank and HDFC are around 67% and 73% respectively. This makes their holding in other institution also of foreign investments. Hence they want to be recognized as Indian banks as the restriction for other investments in India. ICICI and HDFC both have other subsidiaries like life insurance and mutual fund wings where the foreign investments has some restriction and limitation. If they are recognized as foreign banks they can not hot majority stake in their subsidiaries.

If a company to be an Indian owned it has to be held more than 50% by the Indian residents or institutions. But these banks are not! Government may amend the rules to make them enjoy the foreign holdings and also to continue enjoying the benefits given to Indian Banks. But we Indians should understand that they are no more owned by us.

Ownership as on Mar 10

Promoter &
Promoter Grp
Non Institution9,11,87,27810,37,85,165
Bodies Corporate4,15,03,4702,91,01,511
Data from BSE India Ltd,

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