Stocks

RBI tells HDFC to cut stake in two insurance arms; shares slip 7.5%

Our Bureau Mumbai | Updated on May 18, 2020 Published on May 18, 2020

Shares of Housing Development Finance Corporation (HDFC) were trading down 2.73 per cent at ₹1,590.95 apiece on Monday at 10.22 am as the Reserve Bank of India (RBI) directed the Corporation to reduce its stake to below 50 per cent in its two insurance subsidiaries -- HDFC ERGO General Insurance Company Ltd and HDFC Life Insurance Company Ltd .

The RBI has directed HDFC that post merger of HDFC ERGO Health Insurance Ltd with HDFC ERGO General Insurance Company Ltd, its stake in the merged entity should be brought down to 50 per cent or below within a period of six months from the date of merger.

Currently, the Corporation holds 51.15 per cent stake in HDFC ERGO Health and 50.48 per cent stake in HDFC ERGO General Insurance and based on the share exchange ratio, it is entitled to 50.48 per cent stake in the merged entity -- HDFC ERGO General Insurance, HDFC said in a regulatory filing.

The merging entities have filed necessary petitions with the National Company Law Tribunal, Mumbai, and are seeking its approval.

Meanwhile, RBI has also directed the Corporation to bring down its stake in HDFC Life Insurance Company Ltd to 50 per cent or below from its existing shareholding of 51.43 per cent on or before December 16, 2020.

Published on May 18, 2020

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