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IDFC shares fell more than 9 percent in early trade Tuesday to touch more than four-year low of Rs 86.10 after MSCI removed the stock from its Standard and Large Cap indices.

The removal was due to cut in foreign institutional investor (FIIs) limit in the company to 54 percent from 74 percent, as notified earlier by the Reserve Bank of India.

The company had asked all custodian banks not to make any further purchases through secondary market on behalf of their FII and NRI clients. Earlier on August 26, it had send an e-mail to stop purchases.

"Ceiling limit in respect of all the FIIs, FDI, NRIs, OCBs and foreign nationals have now been reduced from 74 percent to 54 percent. The current foreign shareholding in IDFC is 53.71 percent," according to the company's filing.

As IDFC has applied for a banking license, hence this was a technical clarification by RBI not to increase the FII investment higher than 54 percent.

At 09:42 hours IST, the stock was down 6.5 percent to Rs 88.80 on the Bombay Stock Exchange.