LIC Secures RBI Approval for 9.99% Stake Acquisition in HDFC Bank

In a significant financial development, the Reserve Bank of India (RBI) has granted approval to Life Insurance Corporation (LIC) for acquiring up to a 9.99% stake in HDFC Bank Ltd. The state-owned life insurer received this regulatory nod with a directive from the RBI, instructing the acquisition to be completed by January 24, 2025. This strategic move is expected to have far-reaching implications in the financial landscape.

The announcement came through an official exchange filing by HDFC Bank on Thursday, revealing the pivotal decision and its associated timeline. The RBI’s approval is contingent upon the application submitted by LIC to the central bank, marking a crucial step in the process.

Regulatory guidelines dictate that LIC’s cumulative holding should not surpass 9.99% of the paid-up share capital of HDFC Bank at any given time. This stipulation is in line with established norms to ensure a balanced and regulated approach to shareholding in financial institutions.

As of December 2023, LIC already held a notable 5.19% stake in HDFC Bank, according to data available from the Bombay Stock Exchange (BSE). The acquisition of an additional stake up to the approved limit signifies LIC’s strategic interest in furthering its involvement with one of India’s leading private lenders.

The news had a measured impact on the stock market, with HDFC Bank’s shares experiencing a marginal 0.33% dip, closing at Rs 903.3 apiece. In comparison, the broader BSE Sensex registered a 0.51% decline.

This development positions LIC as a significant stakeholder in HDFC Bank, potentially influencing the bank’s strategic decisions and further solidifying LIC’s role in shaping the dynamics of the Indian financial sector. As the transaction unfolds over the coming months, the markets will keenly observe the implications of this collaboration on both entities and the broader financial landscape.