Axis Bank Current Affairs - 2019

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Cabinet approves raising foreign investment to 62% in Axis Bank

The Cabinet Committee on Economic Affairs (CCEA) has given nod to the proposal of Axis Bank for hiking foreign investment from 49% to 62% entailing an inflow of about Rs 7,250 crore. It will be subject to the aggregate foreign institutional investors holding not exceeding 49% of the paid up equity share capital of the bank.

What would be the effect of the hike in foreign investment in Axis Bank?

As a result of the inflow and increase in stake by foreign investors, the bank will turn into foreign-owned, whereby every future investment in seven subsidiaries will be governed by the FDI (Foreign Direct Investment). According to  the FDI policy, downstream investment by an Indian company, which is not owned and/or controlled by a resident entity/ies into another Indian company would be in accordance or compliance with the relevant sectoral conditions on entry route. The bank’s seven subsidiaries are Axis Capitals, Axis Finance Pvt Ltd, Axis Private Equity ltd, Axis Trustee Services Ltd, Axis Asset Management Company, Axis Mutual Fund Trustee Ltd and Axis UK Ltd.

RBI: Inflation linked bonds for sale from December 23, 2013

The Reserve Bank of India (RBI) will issue Inflation Indexed National Savings Securities Cumulative (IINSS-C) bonds (or inflation linked bonds) for retail investors by opening the subscription on December 23, 2013 and close it on December 31, 2013.

Objective: The move will help to protect retail investors from price rise.

The IINSS-C bonds will offer investors a return i.e. 1.5% more than inflation based on the consumer price index. Interest will be compounded half yearly, enhancing effective yield on investments.

Inflation linked bonds

  • The limit for investment per applicant per annum: Rs 5,000 – Rs 5 lakh.
  • Eligibility for subscription: Individuals, Hindu Undivided Family, charitable institutions and universities.
  • The interest rate on these bonds would be linked to the Consumer Price Index (CPI).
  • The interest rate would comprise two parts — a fixed rate of 1.5% per annum and inflation rate based on CPI with a lag of three months. It would be compounded on the principal on half-yearly basis and paid at the time of maturity.
  • For senior citizens (65 years and above of age),  early repurchase will be allowed after one year from date of issue and other investors can redeem them after three years but with penalty of 50 per cent of the last coupon paid.
  • RBI will act as a central depository, as these securities will be issued in the form of Bonds Ledger Account (BLA) and held with RBI.
  • Distribution or sale of bonds would be through banks: SBI, nationalized banks and three private banks HDFC Bank, ICICI Bank and Axis Bank  and Stock Holding Corporation of India.