Friday, 28 July 2023, Bengaluru, India
On Wednesday, Mahindra & Mahindra (M&M) said it had purchased a 3.53 percent share in RBL Bank, a private-sector lender. The business said it is open to buying as much as 9.9% of the bank in a stock market filing confirming the development.
Mahindra and Mahindra released a statement saying it has ideas to invest in other sections, which are subject to changes in prices, regulatory approvals, and required procedures. Keeping everything on the table, Mahindra and Mahindra are prepared for anything, but the company has mentioned it won’t acquire any more of the bank than 9.9%.
M&M is well-established in a number of industries, including technology, automotive, and non-bank financial services. But, the recent purchase of a stake in RBL Bank raises the possibility that the conglomerate is now aiming to grow in the official banking industry.
Together with investment firm Maple, M&M will hold the largest position in the bank after its acquisition of a nearly 10% interest is complete. It should be emphasized that M&M’s declaration comes at a time when regulators are concerned about corporate houses owning banks. After widespread resistance, the Reserve Bank of India (RBI) earlier dropped a plan that would have let corporations eventually acquire banks.
Mahindra & Mahindra is committed to exploring more investment opportunities in RBL Bank despite the cautious regulatory climate, as long as its shareholding does not exceed 9.9%.
Mahindra Group now owns 3.53 percent of the bank’s total paid-up share capital, according to RBL Bank, which replied to media claims that the company wanted to acquire a strategic position of more than 15% in the institution on Wednesday.
It further said that any shareholder wishing to buy 5% or more of a bank’s shares must obtain prior RBI permission, which as of this writing has not been granted.
Mahindra & Mahindra’s investment in RBL Bank opens a new chapter in the bank’s history. The bank saw a fall in deposits at the beginning of 2020, although it subsequently rebounded and raised capital in November 2020 to keep investors confident. According to the bank’s most recent earnings report for the quarter ended June 2023, increased interest revenue and lesser provisions helped to boost net profit by 43.2% year over year.
The price of RBL Bank’s shares has significantly increased over the past month, rising by 44% from June 26 to the close of trade on Wednesday. Mahindra & Mahindra has the chance to expand its presence in the banking industry and take advantage of RBL Bank’s potential for development and profitability by purchasing a share in the bank.
Source- India Today