Centurion Bank is rejigging its plan for infusion of foreign funds by using both foreign direct investment as well as foreign institutional investor routes.

The bank had earlier applied to the Foreign Investment Promotion Board seeking a temporary breather for breaching the 49 per cent cap of FDI into the bank.

Now it plans to bring down the foreign fund infusion to the permissible limit and raise the funds through the FII route.

When contacted, Centurion Bank chairman and managing director V Jankiraman refused to comment on the development but said the bank has not got any response from FIPB.

As the bank is now re-working its capital infusion plan to comply with the existing FDI and FII provisions, it will no longer need the FIPB approval, said a banking industry source.

Under the present guidelines, investments through both FII and FDI routes are capped at 49 per cent each.

Sabre Capital Investor Group and BankMuscat, along with existing investors of the bank, will bring Rs 154 crore (Rs 1.54 billion) in the first tranche into the bank. In the next phase, there will be a Rs 65 crore (Rs 650 million) public-cum-rights issue.

According to the original plan, after the first phase, the FDI stake in the bank would have increased to around 61 per cent. This would have come down to below 49 per cent after the rights issue.

Now, Sabre Capital and other investors are likely to invest in Centurion Bank through the FII route while Bank Muscat will take the FDI route.

Bank Muscat will invest Rs 75 crore (Rs 750 million) in Centurion Bank. This includes the merger of its Bangalore branch operations.

The major foreign stakeholders in the bank are Keppel (around 17.71 per cent) and ADB (10.22 per cent). IFC's stake in the bank has been reduced to 2.72 per cent from 8 per cent.

Sabre Capital along with other investors will bring in around Rs 54 crore (Rs 540 million) into the bank. Part of this capital will come through the FII route as it will involve investments by high net worth individuals and mutual funds.

The bank board is meeting on November 24. The board may decide on an effective date and record date for the reduction in share capital.

Within 15 days of the effective date, the Sabre Investor Group and others will bring in Rs 154 crore (Rs 1.54 billion) as the first tranche of equity into the bank.