Power Grid Corporation of India has said that increasing the limit would provide more headroom for investments by FIIs in the company.
In the postal ballot notice sent to shareholders, the utility has said that present holding of FIIs in the company is about 16% of the paid-up capital.
FIIs holding has been on the rise since the company's FPO in 2010.
To "make more headroom for FIIs", it is proposed to increase their shareholding limit in the company to 30% from 245 of the paid-up capital, according to Power Grid.
Further, the firm has said that increasing the limit would also enable FIIs to acquire shares within the proposed limit of 30% of paid-up capital under the portfolio investment scheme of the Reserve Bank of India.
Besides, the company has sought approval from shareholders to increase borrowing limits to R1,30,000 crore from the current cap of R1,00,000 crore.
Both proposals were approved by Power Grid's board of directors during their meeting held on October 23.
Meanwhile, the central transmission utility, which is expected to come out next month with its FPO, would see issue of 13% fresh equity besides the government selling 4% stake in the offering.
The company would issue fresh 60.18 crore shares while the government would sell 18.51 crore scrips through the FPO, which was cleared by the Cabinet earlier this month.
Power Grid came out with its initial public offering in October 2007.