SBI Funds Management gets RBI nod to raise upto 9.99% stake in HDFC Bank

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SBI Funds Management has received RBI’s approval to increase its stake in HDFC Bank to 9.99 per cent in six months. The investment will be made as part of the mutual fund schemes administered by the SBI Funds Department.

An application submitted by the SBI Funds Department to the Reserve Bank of India has been granted approval, according to a statement by HDFC Bank, which added that approval is subject to few conditions.

The Reserve Bank of India advised the fund house to acquire the majority stake in the bank by November 15. Further, SBIFML must ensure that the total holding in the bank remains less than 10 percent of the paid-up capital or voting rights of the bank at all times, he said.

SBI Funds Management is the largest in the country with assets under management of Rs. 7.17 crore as of the end of March.

The Finance House’s attempt to increase its stake in HDFC Bank comes when it is about to merge its subsidiary HDFC with itself, and expectations indicate that there will be an investment outflow of $150-200 million in the merged entity.

Analysts take

Global index compiler MSCI recently said it would reduce the combined HDFC entity’s weighting to 6.50 percent from 6.74 percent.

By the way, HDFC is part of the MSCI World Index with a weight of 6.74 percent, while HDFC Bank is not part of the index.

Most analysts expected a buying opportunity in the stock if it declines due to the MSCI’s lower weighting, particularly due to the better prospects and the strong performance of both financial institutions.

HDFC Bank reported a 21 per cent jump in consolidated net profit for the March quarter to Rs.12,594 crore on a 30 per cent increase in income at Rs.57,159 crore. HDFC also recorded a 20 per cent growth in standalone net profit at Rs 4,425 crore on a 36 per cent increase in revenue at Rs 16,679 crore.