RBI, Government Yet To Clear FPI Cap Request For Emirates NBD Deal, Says RBL Bank

RBL Bank Ltd. is yet to receive approval from the government and the Reserve Bank of India on its request to cap foreign shareholding in the bank to 24% till the deal with Emirates NBD is concluded.

The Dubai-based lender had announced a $3 billion deal to acquire 60% stake in RBL Bank in October via a preferential allotment of equity shares. It now has sufficient foreign shareholding headroom to hold minimum 51% stake in RBL Bank, according to a stock exchange filing on Wednesday.

RBL said both parties are actively engaged in fulfilling the conditions precedent to the proposed transaction. "The Bank and the Investor continue to engage with the Government of India and the Reserve Bank of India for the other requisite regulatory approvals," the filing said.

Emirates NBD will acquire control over the RBL Bank and will be classified as a promoter, and the acquired bank will be classified as a subsidiary of a foreign bank.

India allows 74% foreign investment in private banks, but limits shareholdings of any single foreign institution to 15% unless the regulator has approved.

The Emirates NBD-RBL Bank deal is expected to be closed by April. The acquisition requires approval from the RBI, the Securities Exchange Board of India, and the Competition Commission of India.

RBL Bank, formerly known as The Ratnakar Bank Ltd, is a private sector lender established in 1943. Originally established as a regional bank in Maharashtra, RBL Bank became a private sector lender in 1970. It, however, remained a closely owned small lender, largely limited to Maharashtra.

The bank will continue hosting its current client base in the retail and medium, small and micro enterprises segments. Emirates NBD is expected to help in developing its cross-border financing and non-resident businesses through this transaction.