RBI allows LIC to acquire 9.99% stake in HDFC Bank

The Reserve Bank of India (RBI) has given its nod to Life Insurance Corporation (LIC), to acquire 9.99% stake in HDFC Bank.

“LIC has been advised by RBI to acquire the aforesaid major shareholding in the Bank within a period of one year i.e. by January 24, 2025," HDFC bank said in regulatory filing.

LIC acquires more HDFC stake

LIC already owns 5.19% stake in HDFC Bank and had sent an application to RBI regarding expanding its shareholding in the bank.

While giving permission, RBI had advised the insurance giant to acquire the major shareholding in HDFC Bank within a period of one year, i.e. by January 24, 2025. LIC is also instructed to ensure that the shareholding does not exceed 9.99% of the paid-up share capital or voting rights of the bank at all times.

“Pursuant to Regulation 30 of the SEBI Listing Regulations, we would like to inform you that the Reserve Bank of India (RBI) vide its letter dated January 25, 2024 addressed to Life Insurance Corporation of India (LIC), has accorded its approval to LIC for acquiring aggregate holding up to 9.99% of the paid-up share capital or voting rights of HDFC Bank Limited,” HDFC bank further said in its regulatory filing.

Paid-up capital is the amount of money received by the company when it sells its shares to the shareholders and investors directly through the primary market.

HDFC Bank Q3 Results

This comes as HDFC Bank has been struggling to reach their former potential on the Indian stock markets. The share price suffered a dip after a disappointing quarterly results. HDFC Bank shares on Thursday closed 1.4% lower at Rs 1,440.70.

As per Bernstein Research, the bank disappointed both in terms of the loan to deposit ratio and net interest margin change. Core net interest margin for the bank stood at 3.4% as of Dec. 31, and at 3.6% on an interest earning assets basis. Meanwhile, the net profit rose 33% Y-O-Y to Rs 16,372 crore in Q3FY24, which was near expectations. However, it included a one-time tax rate gain. The bank's net interest income grew 24% on-year to Rs 28,470 crore during the quarter, falling below estimates.

The Non-performing assets of the bank also grew by 1.26% in Q3FY24 from 1.23% last fiscal. Its net NPA dropped to 0.31% from 0.33% in this period.

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