RBI allows SBI Funds to buy up to 9.99% stake in HDFC Bank
The asset management company (AMC) currently holds a 5.07% equity stake in HDFC Bank and another 3.79% in mortgage financier Housing Development Finance Corp.
The Reserve Bank of India (RBI) has approved asset management company SBI Funds Management Ltd’s (SBIFML) proposal to acquire up to 9.99% stake in HDFC Bank, the lender said in a regulatory filing on Wednesday.
The asset management company (AMC) currently holds a 5.07% equity stake in HDFC Bank and another 3.79% in mortgage financier Housing Development Finance Corp. (HDFC). A person aware of the development said the AMC would have taken prior approval to hold a stake up to a certain level, which would be breached after the merger of HDFC into HDFC Bank. The approval to go up to 9.99% will ensure that it complies with RBI norms on shareholding in banks.
Announced in April 2022, India’s largest private sector lender will take into its fold, promoter HDFC. As per mer-ger terms, shareholders of mortgage lender will get 42 equity shares of HDFC Bank for every 25 shares they hold.
Under RBI regulations, anyone looking to purchase shares of a bank that would result in a major shareholding should seek prior approval of the regulator. Major shareholding is defined as an aggregate holding of 5% or more of paid-up share capital or voting rights in a bank.
The regulator has advised SBI Funds to acquire shares in the bank by 15 November.
“Reserve Bank of India vide its letter dated 16 May 2023 addressed to SBI Funds Management Ltd, has accorded its approval to SBIFML for acquiring up to 9.99% of the paid-up share capital or voting rights of HDFC Bank Ltd,” the bank informed the exchanges.
Further, SBI Funds must ensure that the aggregate holding in the bank remains below 10% of the paid-up share cap, the bank said in the regulatory filing.
That said, the approval granted by RBI is subject to the conditions including compliance with the Banking Regulation Act, RBI’s master direction and guidelines on acquisition and holding of shares or voting rights in banks published on 16 January, provisions of the Foreign Exchange Management Act, and provisions of regulations issued by Securities and Exchange Board of India (Sebi), among others.
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First Published:17 May 2023, 11:14 PM IST
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