Mahindra and Mahindra does not intend to build on its stake in RBL Bank, the Indian automaker said on Friday, roughly a week after its purchase of a 3.5% stake in the lender sparked investor concerns.
Mahindra shares plunged at the announcement of the 4.17 billion rupee ($50 million)-deal, in which the company said it also planned to raise its stake to 9.9% in the future, subject to regulatory approval.
"This investment is really for us to understand banking in a lot more detail with a seven- to 10-year view," CEO Anish Shah said in a press conference following the company's earnings on Friday.
"We will stay at 3.5% unless we see something meaningful from a strategic standpoint in the future. Today, there is no view to go higher than where we are."
Mahindra is also "not necessarily" seeking to get a board seat at the private bank, he added.
India's banking regulations prevent large corporate groups from holding strategic investments in the banking sector. In addition, any investor needs approval from the Reserve Bank of India to hold more than 10% in a bank.
Earlier in the day, the automaker posted first-quarter profit that nearly doubled, surpassing estimates, driven by higher sales of its expensive sports utility vehicles (SUVs).
