This is to adhere with the Reserve Bank of India norm that specifies a single corporate entity's holding in a bank should not exceed 10 per cent.
Ashok Leyland has recently offloaded 2.5 lakh shares of IndusInd Bank in the open market. This has brought down its stake from 16.6 per cent to around 16 per cent.
Ashok Leyland had held 75 per cent stake in Ashok Leyland Finance. Following ALF's merger with IndusInd Bank in June, 2004, Ashok Leyland had acquired a 15.3 per cent stake in the bank.
Going by the RBI norm, Ashok Leyland needs to pare its stake in IndusInd to 10 per cent by June, 2005.
Domestic and foreign institutional investors' holding in the bank, as on December, 2004, stood at 9 per cent against 8.25 per cent in March, 2004.
"Two Chennai-based mutual funds have shown interest in picking up a stake in the bank," a banking source said adding that process (of sale) should be completed by March-end.
Ashok Leyland has decided to offload its stake in small tranches to avoid any impact on the stock price, said banking source.
"Ashok Leyland's intention is to divest its stake in the bank at the opportune time and at right price," said K Sridharan, executive director, Ashok Leyland.
"We have kept our options open and could bring down Ashok Leyland's stake below 10 per cent," he added.
On divesting stake in favour of another group company, he said, "Our understanding is that offloading Ashok Leyland's stake to a group company will not find favour with the regulator. However, we have not yet taken a final decision on the matter."
