China's central bank, People's Bank of China (PBOC), reportedly raised its stake in India's mortgage lender HDFC to 1.01 per cent from the existing 0.8 per cent, said news reports. The report of POBC's stake hike in HDFC reportedly raised concerns of the government though there is no rule to ban investment by any Chinese company in an Indian entity.
The People's Bank of China had held 17.5 million shares of HDFC as per the shareholding disclosures for the March quarter and it is not clear if the PBOC purchased the shares between January and March. HDFC stock fell about 40 per cent this year from a high of Rs 2,493 to a low of Rs 1,499 last week, the report said adding the stock jumped 14 per cent last week to close at Rs 1,702 on Thursday.
HDFC vice-chairman and CEO Keki Mistry said the PBOC has been an existing shareholder and had owned 0.8 per cent in the company as of March 2019. "The disclosure has been made now since the stake has hit the 1 per cent regulatory threshold. They have been accumulating the shares over a year and are now holding 1.01 per cent," added Mistry. The PBOC's 1.01 per cent consists of 17.49 million shares of HDFC.
As per the norms, the companies have to disclose shareholding changes to the exchanges at the end of every quarter only if an investor's stake crosses 1 per cent. Meanwhile, the finance ministry is reportedly concerned over the move as no objection was raised on the Chinese central bank's stake hike in the HDFC, said a report.
It was not mandatory for HDFC to disclose the Chinese central bank's 0.8 per cent stake and when the stake holding crossed 1 per cent threshold, the home loan lender complied with the regulations. Since, the deal was a secondary market transaction, HDFC had no role in it, the report said. "No less an institution than a central bank of the world's second largest economy has bought a stake in one of India's largest financial institutions. Normally, there would be no need for xenophobic hysteria over this but a central bank buying an equity stake in a commercial entity is unusual. No red flag was raised," a source was quoted as saying in the report.
