RBI Approves LIC’s Acquisition of Stake in HDFC Bank


In a significant development, the Reserve Bank of India (RBI) has granted approval to Life Insurance Corporation of India (LIC) to acquire up to a 9.99% stake in HDFC Bank Ltd, as announced by the bank in a recent stock exchange filing. This move is expected to inject positive momentum into HDFC Bank, especially after a recent dip in its stock value following tepid third-quarter results and selling by Foreign Portfolio Investors.

According to the filing, LIC has been advised by the RBI to complete the acquisition within a one-year timeframe, specifically by January 24, 2025. Additionally, LIC must ensure that its aggregate holding in HDFC Bank does not exceed 9.99% of the paid-up share capital or voting rights at any given time.

HDFC Bank highlighted in its regulatory filing that the approval from the RBI is contingent upon several conditions. These include compliance with the relevant provisions of the Banking Regulation Act, 1949, RBI’s Master Direction, and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies issued on January 16, 2023 (and any subsequent amendments), as well as adherence to provisions of the Foreign Exchange Management Act, 1999. Furthermore, HDFC Bank is required to comply with regulations issued by the Securities and Exchange Board of India (SEBI) and any other applicable guidelines, regulations, and statutes.

About RBI Approves LIC’s Acquisition:

This development is expected to be well-received by HDFC Bank shareholders, as it provides a boost to the bank’s market position and potential for growth. The approval from the RBI signifies confidence in LIC’s strategic investment in HDFC Bank and is likely to have a positive impact on the bank’s financial stability.

The move also comes at a crucial time for HDFC Bank, which recently witnessed a dip in its stock value, hitting a new 52-week low earlier this month. Factors contributing to this decline included lackluster third-quarter results and selling pressure from Foreign Portfolio Investors. The approval for LIC’s acquisition could serve as a catalyst for renewed investor confidence and a potential turnaround in HDFC Bank’s stock performance.

RBI’s approval for LIC to acquire a significant stake in HDFC Bank is a noteworthy development that holds the promise of positive implications for the bank’s future. Shareholders and market observers will be keenly watching for the impact of this strategic move on HDFC Bank’s overall performance in the coming months.