The Reserve Bank of India (RBI) has approved SBI Funds Management Limited (SBIFML) to acquire up to 9.99% of the paid-up share capital or voting rights of HDFC Bank. The approval is subject to certain conditions, including that SBIFML must acquire the stake within six months (by November 15, 2023) and that the aggregate holding in HDFC Bank remains below 10% at all times.
The approval comes as HDFC Bank and HDFC are in the process of merging. The merger is expected to be completed by July 2023.
HDFC Ltd. has already received approvals from the RBI, Securities and Exchange Board of India (SEBI), Pension Fund Regulatory and Development Authority (PFRDA), Competition Commission of India, and the stock exchanges BSE and NSE.
The RBI has also allowed HDFC Bank or HDFC Ltd. to increase their shareholding in HDFC Life and HDFC ERGO to more than 50%. This will allow the merged entity to have a controlling stake in these two insurance companies.
The approval from the RBI is a major step forward for the merger of HDFC Bank and HDFC. It is expected to create the largest private sector bank in India with a combined asset base of over $250 billion. The merger is also expected to create synergies and improve efficiency, which will benefit customers and shareholders.