In a recent regulatory filing, HDFC Bank announced that the Reserve Bank of India (RBI) has granted approval for Life Insurance Corporation (LIC) to acquire a 9.99% stake in the private sector lender. The approval, conveyed through a letter dated January 25, 2024, is subject to conditions outlined in the Banking Regulation Act, 1949, RBI’s Master Direction, and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies, along with provisions of the Foreign Exchange Management Act, 1999, and SEBI regulations.
The RBI’s approval, obtained on LIC’s application, comes with the stipulation that LIC must complete the acquisition of the specified stake within one year, by January 24, 2025. Moreover, LIC is required to maintain the aggregate holding below or at 9.99% of HDFC Bank’s paid-up share capital or voting rights.
In response to this development, HDFC Bank’s shares closed 1.4% lower on the trading day. The bank had recently reported a consolidated net profit of ₹17,258 crore for the October-December period, marking a 2.65% increase from the preceding September quarter. However, Motilal Oswal Research described the quarter as “mixed,” emphasizing growth in core net interest income and other income. The bank also showcased improvement in gross non-performing assets ratio at 1.26%, compared to 1.34% in the quarter-ago period.
The regulatory green light for LIC’s acquisition of a 9.99% stake in HDFC Bank underscores the evolving landscape of strategic partnerships in the financial sector. As LIC navigates the process within the stipulated timeline, the move is expected to influence the dynamics of the banking and insurance sectors, potential opening avenues for collaborative growth and synergies between the entities involved.
