A day beforehand of its IPO, AU Small Finance bank has been positioned below the caution checklist by means of RBI to monitor its overseas shareholding which is hovering across the permissible restrict of 49%

AU Small Finance bank’s Rs1,912 crore preliminary public providing (IPO), at a cost band of Rs355-358 per share, starts offevolved on Wednesday.

AU Small Finance bank has already handed resolutions for growing overseas institutional investors (FIIs) or overseas portfolio traders (FPIs) limit under portfolio funding scheme as much as 49% of its paid up capital. FIIs, FPIs, global depository receipts, American Depository Receipts, FDI, NRIs, persons of Indian foundation (PIOs) are the entire sources — who mutually usually are not allowed to hold over 49% in small finance banks in India.

The limit may also be improved handiest after prior approval from the RBI.

In a notification today, RBI said the entire foreign shareholding via all sources in the firm has reached the trigger limit. “hence purchases of equity shares of this company could be allowed handiest after acquiring prior approval of the Reserve bank,” it said in a notification.

As per the extant rules, overseas shareholding in small finance banks is governed underneath overseas direct investment (FDI) policy for personal sector banks. the present rule allows an mixture overseas funding of up to 49% under automated route and it can be more desirable as much as 74% thru an approval process.

The Jaipur-primarily based AU Small Finance bank was a non-banking finance company past — AU Financiers India. It used to be one in every of the ten entities that got SFB license by means of RBI in June 2015. It started operations as an SFB in April this year.

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