The RBI ruling on the matter is critical as it will once and for all clear the issue as to what constitues FDI in private banks in the country. The Washington-based IFCs communication to RBI comes in the aftermath of the Foreign Investment Promotion Board (FIPB) ruling that ING group concern Bank Brussels Lamberts (BBL) intention to pick up 49 per cent in Vysya Bank will violate the ceiling on FDI in private banks.
While it has been gathered that the ING group on its part is categorical that it will stick with the RBI ruling whatever it may be, well placed sources said that in case the RBI deems the IFC stake to be FDI, and if IFC does not want to sell the same, the ING group will be content with a 39 per cent stake in Vysya Bank.
In a single fell swoop, the RBI ruling in this regard will also qualify the nature of IFCs investments in two other new generation private banks Global Trust Bank and Centurion Bank: as to whether they are in the nature of portfolio investments or FDI.
It is also pertinent to note that while the GMR group had offered IFC a board-seat on Vysya Bank on account of the latters 10 per cent holding, IFC did not take this up. It is also pointed that in case IFCs stake is deemed as FDI, and it opts to sell its stake, it will still make a neat return on its investment. Apparently, IFC had picked up the 10 per cent stake in Vysya Bank in the Rs 100-125 range around April 2000. The stock currently quotes at about Rs 236 a share though this is still lower than the price offered by the ING group through BBL to the GMR group for its 23.99 per cent stake in Vysya Bank at Rs 600 a share amounting to Rs 340.81 crore.
BBL now holds 20 per cent in Vysya Bank and, with the 23.99 per cent from the GMR group and an additional 5 per cent to be picked up later, proposes to increase the holding to 49 per cent.