The Hindu Business Line : HSBC stake sale in tune with RBI norms

HSBC's divestiture of a 3.89 per cent stake is to be seen in the context of the regulatory requirement that no bank should have a shareholding of more than 5 per cent of the capital of any bank in India.

All banks that have investment above this limit are expected to give the regulator a time frame by which they will fall in line.

HSBC's stake in UTI Bank after the partial sale is at 8.3 per cent, indicating that it will still have to perform an encore sometime in the near future.

The Reserve Bank of India had indicated in its policy on ownership and governance in private banks, unveiled last year that it wanted "ultimate ownership and control to be well diversified".

HSBC had originally hoped to pick up 20.08 per cent of UTI Bank's stake in 2003.

However, the RBI approved only the first tranche of 14.62 per cent aggregating about Rs 304 crore and rejected its plans to buy the balance 5.46 per cent.

The RBI did not provide any reasons for the rejection, but it was clear that the RBI was not comfortable with HSBC's stated plans.

HSBC had maintained that its investment in UTI Bank was a "financial investment".

But it was open to looking at other possibilities if there was agreement with other promoters as well as change in voting rights, which at that point of time was capped at 10 per cent.

HSBC's stake of 14.6 per cent came down to 12.19 per cent after UTI Bank went in for a GDR issue last year.

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