RBI Consents SBI Funds Management to Acquire 9.99% Shares in HDFC Bank

May 18, 2023

The Reserve Bank of India (RBI) permits SBI Funds Management (SBIFML) – a joint venture between State Bank of India and France's AMUNDI, to buy 9.99% shares in HDFC Bank.

Earlier, as per the exchange filing, SBI Funds Management had filed an application with RBI to acquire the shareholding in HDFC Bank. In a regulatory filing, the HDFC Bank said, “The RBI vide its letter dated May 16, 2023 addressed to SBI Funds Management Limited, has accorded its approval for acquiring up to 9.99% of the paid-up share capital or voting rights of HDFC Bank." The central bank has advised SBIFML to buy stakes within 6 months; i.e., November 15, 2023.

Further, the approval granted by the RBI is subject to conditions, including compliance with the relevant provisions of the Banking Regulation Act, RBI’s master direction and guidelines on acquisition and holding of shares or voting rights in banking companies and other regulations.

Notably, 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 Ltd). However, HDFC Bank stated that SBI Funds Management has to ensure that the aggregate holding in the Bank remains below 10% of the paid-up share capital or voting rights of the Bank at all times.

Apart from this, the merger of HDFC Bank and HDFC Ltd is expected to be completed by July, 2023. Commenting on the possibility of merger, Mr Deepak Parekh, Chairman of HDFC Ltd. said, "This is a merger of equals. We believe that the housing finance business is poised to grow in leaps and bounds due to the implementation of RERA, infrastructure status to the housing sector, and government initiatives like affordable housing for all, amongst others."