Don’t miss the latest developments in business and finance.

Bandhan Bank's proposed 14.9% stake to HDFC will test RBI 2016 guidelines

Gruh Finance, the affordable housing finance arm of HDFC, was taken over in January by Kolkata based Bandhan Bank in a share swap deal.

Bandhan Bank's proposed 14.9% stake to HDFC will test RBI 2016 guidelines
After the merger, the shareholding of Bandhan Financial Holdings in Bandhan Bank would reduce from 82.3% to 61%
Press Trust of India Kolkata
2 min read Last Updated : Mar 12 2019 | 9:20 PM IST

The Bandhan Bank's proposed 14.9 per cent stake allotment to HDFC for merging Gruh Finance will test the Reserve Bank of India's regulations of 2016 on shareholding in private sector banks.

Gruh Finance, the affordable housing finance arm of HDFC, was taken over in January by Kolkata based Bandhan Bank in a share swap deal.

"RBI's approval had been sought for allotment of 14.9 per cent stake of Bandhan Bank to HDFC post-merger. Though there is no apparent regulatory hurdle in this regard, this is the first case going through the RBI regulations of 2016," sources involved in the deal told PTI.

The deal will allow Bandhan Bank's promoter Bandhan Financial holding to come down to about 61 per cent from about 82 per cent, and HDFC to hold around 15 per cent in the merged entity from about 57 per cent in Gruh.

Meanwhile, Bandhan Bank has denied that it took control of Gruh in a costly deal.

"HDFC is not going to get any board berth and controlling premium in the deal," a top Bandhan Bank source said adding that analysts are not taking these factors into account

Moreover, both the companies (Bandhan Bank and Gruh Finance) are listed entities and the swap ratio was determined by exchange traded prices on which no one has any control, he said.

The swap ratio for the amalgamation will be 568 shares of Bandhan Bank for every 1,000 shares of Gruh Finance.

Also Read

First Published: Mar 12 2019 | 7:49 PM IST

Next Story