Tech-to-tractor conglomerate Mahindra & Mahindra acquired a 3.53% stake in mid-sized private lender RBL Bank for Rs 417 crore (around $50 million), according to an exchange disclosure by the auto company.
The Anand Mahindra-led company said, “we may consider further investment subject to pricing, regulatory approvals and required procedures. However, in no circumstance will it exceed 9.9%.”
As per existing rules, the Reserve Bank of India (RBI) restricts industrial houses to a maximum stake of 10% in banks and cannot act as promoters.
The Mahindra Group is keen on increasing its stake in RBL Bank to 15-25% if it gets the approvals to be a strategic shareholder of RBL Bank, as per a CNBC-TV18 report.
In a clarification after media reports, RBL Bank said that "Mahindra & Mahindra Limited as per the last beneficiary position as on 21 July, 2023 is 3.53% of the total paid up share capital of the Bank."
Being a publicly listed company, for RBL Bank’s shares trading, there is no pre-approval required from the Bank except from RBI.
According to RBI rules, any shareholder keen to acquire 5% or more of the shareholding is required to make an application to the central bank and seek prior approval. to seek their prior approval. No such application has been received by the bank till date, the bank said.
On Wednesday, RBL Bank’s shares touched a 52-week high at Rs 242.10 per share and closed over 7% higher at Rs 238.80 apiece from the previous close on BSE.
At present, Barings Asia holds 9.98% stake along with CDC Group (renamed as British International Investment) at 5.53% and Gaja Capital at 1.34%.
In August 2020, the Barings Asia-led consortium had invested Rs 1,566 crore ($210 million) in the Kolhapur-based bank.
Among other investors, Asian Development Bank holds 2.39% and the bank’s former chief Vishwavir Ahuja continues to hold over 1%, shareholding pattern as on June end showed.
In late December 2021, the bank came under regulatory lens and Ahuja was asked to go on ‘medical leave’ by the RBI.
The central bank appointed an additional director on the private bank’s board due to its weak financials followed by “overindulging retail credit, micro-financing and credit cards and consequently burnt its finger”.
Thereafter in June last year, veteran banker R Subramaniakumar was appointed as its new managing director and chief executive officer.
Established in Kolhapur as Ratnakar Bank in 1943, the old private sector lender renamed itself as RBL Bank in 2014 and went public two years later. It is 100% publicly owned.
