Mumbai: Life Insurance Corporation of India (LIC), India's largest insurance company, has received approval from the Reserve Bank of India (RBI) to increase its stake in HDFC Bank to up to 9.99 per cent.
According to an HDFC Bank regulatory filing dated August 19, the RBI has approved LIC's application to acquire up to 9.99 per cent of the bank's paid-up share capital or voting rights.
The filing said the RBI "has accorded its approval to Life Insurance Corporation of India ("LIC")" for acquiring the additional stake in HDFC Bank.
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As of August 14, LIC holds 4.11 per cent of HDFC Bank's total share capital. The approval would therefore give LIC the option to significantly increase its ownership in the private sector lender, subject to the applicable regulatory and statutory requirements.
The filing further stated that LIC "holds 4.11% of the total share capital of the Bank."
The RBI approval is subject to applicable conditions and relevant SEBI regulations.
The approval follows an application made by LIC to the RBI and would allow the insurer to raise its holding in HDFC Bank from the current 4.11 per cent to nearly 10 per cent. Any increase in the stake will have to be undertaken within the framework of the conditions specified by the RBI and other applicable regulators.
LIC is one of India's largest institutional investors, while HDFC Bank is among the country's leading private sector lenders. A higher stake in the bank would further strengthen LIC's investment exposure to the financial services sector. However, the RBI approval itself does not automatically mean that LIC will immediately raise its holding to 9.99 per cent.
The development comes as institutional ownership and regulatory oversight remain important factors in India's banking and financial services sector. The latest approval provides LIC with greater flexibility to increase its investment in HDFC Bank, subject to compliance with all applicable norms.
