HDFC AMC gets RBI nod to buy stake in Karur Vysya Bank, DCB Bank; stocks rise up to 4%

Shares of Karur Vysya Bank and DCB Bank jumped up to 4% in early trade on Thursday after the Reserve Bank of India (RBI) gave approval to HDFC Asset Management Company (HDFC AMC) to acquire up to 9.5% stake each in the two private sector lenders. HDFC AMC is the investment manager of HDFC Mutual Fund's schemes. HDFC owns a 52.6% stake and is the sole promoter of the company as of June 2023.

Boosted by the development, DCB Bank shares rose as much as 4.4% to ₹129.50 in early deals on the BSE, while shares of Karur Vysya Bank climbed 2.6% to ₹137.20 in the first hour of trade so far. However, shares of HDFC AMC declined as much as 1.4% to ₹2,647.50 after making a flat start. In comparison, the BSE Sensex was trading 316 points, or 0.47%, lower at 66,484 levels at the time of reporting.

DCB Bank in an exchange filing says that the RBI on September 20, 2023, given its approval to HDFC AMC to acquire up to 9.5% of the paid-up share capital of the private lender. “The bank has received an intimation from RBI on September 20, 2023, that it has accorded its approval to HDFC AMC to acquire aggregate holding of up to 9.5% of the paid-up share capital or voting rights of the bank,” it said in a BSE filing on Wednesday.

The approval is subject to “compliance with the relevant provisions of Banking Regulation Act, 1949, Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023 issued by RBI (as amended from time to time), provisions of the regulations issued by Securities and Exchange Board of India, provisions of the Foreign Exchange Management Act, 1999 and any other guidelines, regulations and statutes as applicable”, it says.

The RBI has asked AMC to acquire the shareholding in the bank within a period of one year from the date of approval. “If AMC fails to acquire major shareholding within the stipulated period, the approval granted by the RBI shall stand cancelled. Further, AMC must ensure that the aggregate holding in the Bank does not exceed 9.5% of the paid-up share capital or voting rights of the Bank at all times,” it adds.

In a separate filing, Karur Vysya Bank informed exchanges that the central bank has given nod to HDFC AMC for picking up to 9.5% of the bank's paid-up share capital, subject to requisite approvals. “HDFC AMC must ensure that the aggregate holding in the bank doesn’t not exceed 9.5% of the paid-up share capital or voting rights of the Bank at all times. Further if the aggregate holding falls below 5%, prior approval of RBI will be required to increase it to 5% or more of the paid-up share capital or voting rights of the Bank,” it says.

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