People's Bank of China (PBOC), after raising its stake in HDFC in April, has now trimmed it to below 1 per cent. The development is significant since HDFC received criticism from various quarters over PBOC raising stake in it. HDFC was even targeted on social media, with many saying they would withdraw money and close accounts.
As per the bank's June quarter shareholding disclosure, PBOC is not its shareholder, which means it might have divested 1.75 crore shares worth Rs 3,300 crore at the present value, though it's not clear whether it sold the entire stake or trimmed it below 1 per cent, Business Standard reported.
Notably, shareholders owing below 1 per cent don't reflect on the stock exchange shareholding disclosures. It is compulsory for firms to disclose data for shareholders with over 1% stake at the end of every quarter.
The daily reported it's likely that PBOC might have made good profit by selling the HDFC shares. The share price tanked over 40 per cent in March. But after PBOC raised its stake in April, it's trading over 30 per cent higher compared to this year's lows.
Notably, the trimming of the stake comes hot on the wheels of ongoing India-China tension and calls for the boycott of Chinese products and investment. Experts also believe that the trimming of the stake could have been done to avoid public glare in the wake of souring India-China relations.
PBOC had raised its stake to 1.01% in HDFC in March quarter this year from 0.8 per cent as of March 2019. Moreover, many other Chinese banks have set up their bases in India. Chinese banks like Industrial and Commerce Bank of China (ICBC) and Bank of Ceylon have already set up base in India to operate as a foreign bank.
The Reserve Bank of India (RBI) allows them to either operate as a branch (which most foreign banks do like Citibank, Standard Chartered, HSBC, Deutsche) or operate as wholly-owned subsidiaries. Surprisingly, a third Chinese bank - Bank of China - sneaked in last year without any controversy to set up a branch in India.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today