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The RBI has approved Canara Bank’s stake divestment in Canara Robeco AMC and Canara HSBC Life by 13% and 14.5% respectively via IPO, adhering to the regulatory requirement of a 30% cap.
The Reserve Bank of India has granted Canara Bank approval to divest its shareholding in two of its subsidiaries. Canara Bank will reduce its stake in Canara Robeco Asset Management Company Ltd by 13% and Canara HSBC Life Insurance Company by 14.5% through an Initial Public Offering (IPO). This move aligns with the regulatory requirement to bring Canara Bank’s stake in these entities to 30% by October 2029. The bank has initiated the IPO process and will update the exchanges on further developments.
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RBI has approved a 13% stake divestment in Canara Robeco AMC and 14.5% in Canara HSBC Life.
The divestment aligns with the RBI mandate to limit Canara Bank’s shareholding in these entities to 30%.
Canara Bank will execute the divestment through IPOs.
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Canara Robeco Asset Management Company, established in 1987, is India’s second-oldest mutual fund company. It offers a wide range of investment products, including equity schemes, hybrid funds, and debt instruments. The company operates as a joint venture with Robeco, part of ORIX Corporation, Japan.
Canara HSBC Life Insurance Company, established in 2008, is a joint venture among Canara Bank (51%), HSBC Insurance (Asia Pacific) Holdings (26%), and Punjab National Bank (23%). The company has over 100 branches across India, with a bancassurance-focused model.
Canara Bank recently reported an 11% increase in standalone net profit for Q2 FY25, reaching ₹4,015 crore compared to ₹3,606 crore in Q2 FY24. Interest income for the quarter grew by 11% to ₹29,740 crore, while interest expenditure rose by 14% to ₹20,425 crore.
Metric | Q2 FY25 | Q2 FY24 | Growth |
Net Profit (₹ crore) | 4,015 | 3,606 | 11% |
Interest Earned (₹ crore) | 29,740 | 26,838 | 11% |
Interest Expended (₹ crore) | 20,425 | 17,935 | 14% |
Canara Bank share price ended at ₹108.30 on the NSE, marking a marginal decline of 0.30%. While the announcement did not significantly influence the stock, the bank’s long-term strategy to meet regulatory requirements could improve investor sentiment.
The RBI’s approval for Canara Bank’s stake divestment in Canara Robeco AMC and Canara HSBC Life aligns with regulatory mandates and highlights the bank’s commitment to compliance. The IPOs will likely bolster operational independence for the subsidiaries while supporting Canara Bank’s broader financial strategy.
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