The Department of Financial Services (DFS) has given the green signal to Kotak Mahindra Bank’s proposal to increase the foreign investment limit in the bank to 55 per cent from about 49 per cent would not necessarily lead to problems for the banks plan to raise the foreign investment limit in Kotak Mahindra Old Mutual Life Insurance.
When the government raised the foreign investment (FPI/FDI) limit in insurance from 26 per cent to 49 per cent in March, it stipulated that the insurance ventures in the country should remain “Indian owned and controlled”.
This provision had led to fears that the plans of many insurance companies including those of HDFC and ICICI Bank could stumble upon this condition, enforced by the IRDAI given that these (parent) companies are majority foreign-owned although their foreign ownership is widely dispersed (with various FPI stakes) and management is in Indian hands. Kotak Bank holds 74 per cent in its life insurance arm. HDFC holds 74 per cent in HDFC Standard Life while the UK based Standard Life holds the balance stake.
