The Reserve Bank of India's (RBI) approval is on the condition that aggregate foreign investment will not exceed composite sectoral cap of 74 per cent (49 per cent under automatic route and beyond it to 74 per cent under approval route), the central bank said in a release.
Kotak Mahindra Bank has passed a resolution at board meeting and AGM for purchase of equity shares by FIIs/FPIs/QFIs up to 40 per cent (revised from earlier limit of 37 per cent) of their paid-up capital, it said.
Equity shares of the bank can now be purchased through primary market and stock exchanges provided purchase by a single FII or Sebi approved sub-account does not exceed 10 per cent of the paid-up equity capital of bank.
"It may be ensured that the investments made are within the stipulated ceilings," RBI said.
In a separate release, RBI said foreign investors now would be allowed to purchase equity shares in City Union Bank only after its prior approval as such investment has reached trigger limit.
"The aggregate net purchases of equity shares in City Union Bank Limited by Foreign Institutional Investors (FIIs)/ Registered Foreign Portfolios Investors (RFPIs) has reached the trigger limit.
Hence, further purchases of equity shares of this bank would be allowed only after obtaining prior approval of the RBI," it said.
As per data on BSE, FIIs held 32.23 per cent equity shares in City Union Bank as of quarter ended June 2014.
The RBI monitors ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.
To effectively monitor the limit, RBI has fixed cut-off points two percentage points lower than the actual ceiling.