ICICI Bank and HDFC Bank on Monday played down concerns of being treated as foreign banks on account of majority foreign shareholding in them, saying they continue to remain Indian.
The two -- along with five other private sector banks -- are likely to get impacted by the new FDI policy as foreign shareholding in these entities in different forms like American depositary receipts and global depository receipts exceeds 50 per cent.
This could make them ineligible for being treated as domestic entities.
"Our management continues to be Indian. We continue to remain as a bank of Indian origin. Beyond that the classification of shareholding does not really impact our day-to-day performance," ICICI Bank's managing director and CEO, Chanda Kochhar, told reporters in Mumbai.
The governments decision is likely to impact the future investment plans of these banks in subsidiaries or in sectors where there is a cap on foreign investment but Kochhar said this was not a major concern with the bank.
"We, in any case, do not invest in the equity shares of other companies in a big way. So in that sense, it does not really change life for us," Kochhar said.
HDFC Bank's managing director, Aditya Puri, also echoed a similar view, saying that the FDI policy did not create any issue for the bank.
The bank continues to be an Indian bank with voting rights resting with Indians.
"Voting rights are with Indians. There is no issue as such. The fact is that we are an Indian bank and the voting rights are with Indians. Then how can you say (it is a foreign bank)," Puri said.
The government said on Monday that the new foreign direct investment policy 'is doing well', signalling that at least seven private sector banks in the country may be termed as foreign sector lenders, as their foreign ownership is above 50 per cent.
According to the Press Notes 2, 3 and 4 of the Department of Industrial Policy and Promotion, for a company or entity to be treated as Indian, foreign investment, including American and global depository receipts, foreign currency convertible bonds, convertible preference shares and from non-resident Indians in it should be less than 50 per cent. Concerned over the issue, some of the banks like ICICI Bank, had approached the Government and the Reserve Bank of India.
"Yes there are some banks and the talks have been there between the RBI, finance ministry and commerce and industry ministry. But as of now, the policy which is there is doing very well," commerce and industry minister Anand Sharma said in New Delhi. Seven banks, which are likely to get impacted by the FDI policy are -- ICICI Bank, HDFC Bank, Yes Bank, IndusInd Bank, Federal Bank, ING Vysya and Development Credit Bank.
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