IndusInd Bank rebounds after a 8-day fall, gains 5% on BSE

Shares of IndusInd Bank moved higher by 5 per cent to Rs 929 on the BSE in Wednesday’s intra-day trade after a straight 8-day fall. In past eight trading days, the stock of private sector lender had declined 15 per cent.

At 10:52 am, IndusInd Bank was the top gainer among the S&P BSE Sensex and Nifty50 index. In comparison, the benchmark indices were up 1 per cent. Despite today’s outperformance, the stock was down 25 per cent from its record high level of Rs 1,242 touched on October 28, 2021.

According to report, the Hindujas are considering increasing their stake in IndusInd Bank after the Reserve Bank of India (RBI) eased ownership rules for the country’s private sector banks.

IndusInd International Holding Ltd, the Hinduja-led promoter entity in the private lender, is rasing more than a billion dollars, Ashok Hinduja, chairman of the Hinduja Group of Companies, the Economic Times reported on Monday.

Last week, the RBI had accepted some recommendations of the Internal Working Group (IWG) regarding the extant ownership guidelines and the corporate structure of Indian private banks, including small finance banks (SFBs) and payment banks.

The norm to maintain a minimum (floor) of 40 per cent of paid-up voting equity share capital by the promoter for the first five years has been retained, but there is no cap on the promoters’ holdings in the initial five years. That said, the cap on the promoter’s stake over 15 years has been raised from 15 per cent to 26 per cent.

“The RBI has also clarified that the banks whose promoters have reduced their holdings to below 26 per cent (say 15 per cent) and if the promoters intend to increase them back to 26 per cent, they will be entertained by the RBI. This could be beneficial to IndusInd Bank (if the RBI does not have issues related to promoters),” analysts at Emkay Global Financial Services said in sector update.

In the past, promoters of a few banks like IndusInd Bank had applied to RBI to increase their holdings shortly after RBI allowed promoters of Kotak Mahindra Bank to maintain promoter holding at 26 per cent based on their licensing conditions. The increase in the promoter holding will enable promoters to infuse capital and increase their stake and curtail the limit to which promoters now need to reduce stake either for newly licensed Banks or cases where Bank takeovers have occurred, Motilal Securities Financial Services said in sector update.