MUMBAI, January 30: The Bank of Baroda has disputed the Reserve Bank of India announcement that FIIs' holdings in the bank have touched 16 per cent.According to sources, the FIIs' holding is not more than 8 per cent to 9 per cent in the bank. In fact, BoB has written to the central bank giving various break-ups of foreign portfolio investment, inclusive of NRI, overseas corporate body and FIIs.
It may be recalled that the RBI had issued a press release early this month saying that foreign portfolio investment in BoB has touched 16 per cent and any further FII buying in the scrip would require RBI's permission.
Foreign portfolio investment, the vast majority of which is constituted by FII investment, in banks is restricted to 20 per cent. In the case of companies the ceiling is fixed at 30 per cent.
When the FII investment reaches 16 per cent in banks and 20 per cent in other companies, the Reserve Bank issues a statement restricting further purchases without its prior approval.
This is done toenable an easy monitoring of the investment limit. Earlier, there were incidence of FII-buying exceeding the prescribed limit due to the time-lag between the purchase in the market and reporting to the RBI.
The RBI announcement took the market by surprise, as it was not a much-fancied scrip among FIIs. In fact, the RBI announcement came at a time when FIIs were reducing their exposures in banking stocks.
FIIs outlook on the Indian market has taken a beating following the South-east Asian crisis and they were net sellers in the market for the first time in November and December, 1997. Two weeks ago, the apex bank had allowed fresh investments in the SBI and Housing Development Finance Corporation (HDFC) counters, even when FII holdings in the stocks were only down by 1 per cent to 2 per cent. Usually, the Reserve Bank of India waits for the FII investments to come down by at least 4 per cent before allowing fresh purchases.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
