The entire deal, when completed, will make M&M the biggest stakeholder in RBL Bank along with investment fund Maple.
Mahindra’s disclosure comes amid evident regulatory caution over banking ownership by business houses. The Reserve Bank of India (RBI) abandoned a proposal that would have permitted business houses to eventually own banks after public resentment against an internal working group suggestion in favour of allowing such ownership. The Mahindra Group already owns a non-banking finance company (NBFC).
“We have acquired a 3.53% stake in RBL Bank as an investment at a cost of ₹417 crore,” the Mahindra group said.
‘Open to Acquiring More’
“We may consider further investment subject to pricing, regulatory approvals and required procedures. However, in no circumstance will it exceed 9.9%,” the company said.
On Wednesday, RBL was the first to issue a clarification to the stock exchanges in response to media reports that the Mahindra Group was looking to take a “strategic stake” of more than 15% in the bank.
The bank said that as per the latest beneficiary position as on July 21, 2023, from the National Securities Depository Ltd (NSDL), the shareholding of M&M is 3.53% of the total paid-up share capital of the bank.
RBL, however, clarified that as per the central bank’s directions on acquisition and holding of shares in banking companies, any shareholder willing to acquire 5% or more of the shareholding in a bank must seek prior approval from the RBI.
“No such application has been received by us to date,” RBL Bank said.
Mahindra’s statement came a few minutes after that in which the company confirmed that it is open to acquiring more shares after considering pricing and regulatory approvals.
The company’s interest in the lender is the latest twist in the evolving RBL saga. Early 2020, the bank saw a deep erosion in deposits just before the Covid pandemic. It recouped these deposits but was forced to raise capital in November 2020 to ensure that investor confidence is not hit.
On Christmas eve in 2021, the bank’s long-term CEO Vishwavir Ahuja was sent on leave by the RBI and was replaced by R Subramaniakumar in June last year. Results for the quarter ended June 2023 showed that the bank had made a Rs 288 crore net profit, up 43.2% year on year due to higher interest income and lower provisions.
The bank’s shares have risen 44% in the last one month from Rs 166 per share on June 26 to Rs 239 per share at end of trading on Wednesday. It hit a 52-week high of Rs 242 per share in trading on Wednesday.
M&M’s NBFC, Mahindra Financial Services, reported a loan book of Rs 82,770 crore at the end of March 2023.