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The approval is contingent on compliance with several regulations and guidelines, including the Banking Regulation Act of 1949, RBI’s Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies issued on January 16, 2023, provisions of the Foreign Exchange Management Act, 1999, regulations issued by Securities and Exchange Board of India, among others.
Both banks confirmed the RBI’s approval in their regulatory filings stating that HDFC AMC must ensure that the aggregate holding in each bank does not exceed 9.5% of the paid-up share capital or voting rights at any point. If the aggregate holding falls below 5%, prior approval from RBI will be required to increase it to 5% or more.
HDFC AMC is the investment manager for HDFC Mutual Fund’s schemes and as of June 2023, HDFC holds a controlling stake of 52.6% in the company. The asset management firm reported a significant growth in profit for the first quarter of FY24 with a leap of 52%, while its average assets under management increased to ₹4.86 lakh crore.
The RBI has stipulated a one-year period for HDFC AMC to acquire the shareholding in the banks from the date of approval. Failure to do so within the allotted timeframe will lead to the cancellation of the approval granted by the RBI.
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