Ministry of Finance, India has approved Dubai-based Emirates NBD Bank to buy up to 74% stake in RBL Bank. This decision has paved the way for huge foreign investment worth about Rs 26,850 crore in India.
Business News: A big foreign investment deal has come to light in India’s banking sector. Dubai-based major bank Emirates NBD has got approval to buy up to 74 percent stake in Indian bank RBL Bank. By approving this proposal, the Finance Ministry of India has cleared the way for investment of approximately ₹ 26,850 crore (about 3 billion dollars) in the country. This deal is considered to be one of the largest foreign investments in Indian banking history.
The way for investment opened with the approval of Finance Ministry.
The Department of Financial Services of the Finance Ministry has given the green signal to this acquisition proposal. This approval has been given for stake acquisition above 49% and up to 74%. Earlier, this deal had also received the approval of Reserve Bank of India (RBI) and Competition Commission (CCI). According to RBL Bank, this investment will be made in the form of Primary Capital Infusion. Key terms of the deal:
- Investment amount: Approximately $3 billion (₹26,850 crore)
- Share price: ₹280 per share
- Shares to be purchased: Approximately 95.9 crore equity shares
Through this investment, the bank is expected to get a strong financial footing in its next growth phase.
Emirates NBD will join as promoter
After completion of the deal, Emirates NBD will be recognized as the promoter in RBL Bank. With this, a new foreign banking model will be implemented in RBL Bank, in which an international bank will take over the major stake of the Indian bank. This model can become an important example for foreign investment in India.
Following the proposed transaction, Emirates NBD’s stake will be between 51% and 74%, the final stake will depend on regulatory conditions. This acquisition is considered to be a major change regarding the participation of foreign banks in India. At the time of the announcement, RBL Bank shares had closed around ₹338, registering a marginal gain. Analysts believe that after the approval of the Finance Ministry, a rise in the bank’s shares may be seen. Investor confidence will increase.
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