Canara Bank has received Special Approval from Government to hold stake in its Two Joint Ventures
Canara Bank has received special approval from the Central Government to hold a stake exceeding the 30% limit specified under the Banking Regulation Act, 1949, in two of its joint ventures—Canara Robeco Asset Management Company and Canara HSBC Life Insurance Company.
The bank currently owns a 51% stake in both ventures. It had earlier approached the government seeking permission to divest part of its stake in these companies through initial public offerings (IPOs). Specifically, Canara Bank proposed to sell 13% of its stake in Canara Robeco Asset Management Company and 14.5% of its stake in Canara HSBC Life Insurance Company.
The Central Government, acting on the recommendation of the Reserve Bank of India (RBI), has now exempted the bank from the provisions of sub-section (2) of Section 19 of the Banking Regulation Act, 1949. This provision normally restricts banks from holding more than a 30% stake in any company.
In a notification issued by the Ministry of Finance, it was clarified that this exemption will allow Canara Bank to retain its shareholding above the 30% threshold in these two companies until October 31, 2029, or until the exemption is revoked, whichever is earlier.
This decision provides Canara Bank the flexibility to manage its investments in these joint ventures and proceed with its plans for public offerings, while temporarily exceeding the regulatory shareholding limit. It also highlights the government’s recognition of the strategic importance of these ventures to the bank and its operations.
Established in 2008, Canara HSBC Life Insurance Company Limited is a joint venture promoted by Canara Bank (51 per cent) and HSBC Insurance (Asia Pacific) Holdings Limited (26 per cent). Punjab National Bank is also a shareholder of the Company, holding 23% as an investor. One of the major bancassurance led insurance company with its head office at Gurugram, Haryana and more than 100 branch offices pan India brings together the trust and market knowledge of public and private bank.
