India’s Mahindra & Mahindra (M&M) has acquired a 3.53% stake in RBL Bank for Rs 417 crore ($50 million) and may look to buy up to 10% stake in the private lender, the tech-to-tractor conglomerate said in an exchange filing.
M&M said it “may consider further investment subject to pricing, regulatory approvals and required procedures. However, in no circumstance will it exceed 9.9%”.
Shares of M&M were trading 5.6% lower at Rs 1,458 per share in afternoon trading on Thursday. RBL shares were also trading down 3% at Rs 232 per share.
If M&M acquires a 9.9% stake in RBL Bank, it will become its largest shareholder along with Maple, according to media reports.
The stake purchase in RBL Bank by M&M, which already owns NBFC (non-banking financial company) Mahindra and Mahindra Financial, shows its rising interest in expanding in the formal banking sector.
According to India’s Reserve Bank of India, approval is needed to acquire a 5% stake in any Indian lender.
In response to a media report which said M&M is close to acquiring a 5% stake in RBL Bank, the bank said, “We being a listed company, for trading in the shares of the bank, there is no pre-approval required from the bank except for the fact that as per the RBI, any shareholder who wishes to acquire 5% or more of the shareholding of the bank is required to make an application to the Reserve Bank of India to seek their prior approval for such acquisition. No such application has been received by us to date.”