Canara Bank Gets RBI Nod for Divestment in Subsidiaries via IPOs

Canara Bank has announced that it received approval from the Reserve Bank of India (RBI) to reduce its equity holdings in its life insurance and mutual fund subsidiaries.

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In a regulatory filing on December 5, the bank stated, “The Reserve Bank of India, via its letter dated December 5, 2024, has granted approval for the divestment of our shareholding in Canara Robeco Asset Management Company Ltd and Canara HSBC Life Insurance Company Ltd by 13% and 14.5%, respectively, through an Initial Public Offering (IPO).”

On Thursday, Canara Bank share price closed 0.41% lower at ₹108.15 on the BSE.

Additionally, the RBI specified that, per the exemption granted by the Indian government, the bank must reduce its stake in these entities to 30% by the deadline of October 31, 2029.

Following this development, the public sector bank confirmed its intention to proceed with the IPO process and assured stock exchanges that any significant updates would be promptly communicated.

Canara HSBC Life Insurance is a joint venture in which Canara Bank holds a 51% stake. HSBC Insurance (Asia Pacific) Holdings owns 26%, while Punjab National Bank (PNB) owns the remaining 23%. Similarly, Canara Bank holds a 51% stake in Canara Robeco Asset Management Company, with the remaining equity owned by Japan’s Orix Corporation.

Established in 1993, Canara Robeco Asset Management Company is India’s second-oldest asset management firm. Canara Bank initially launched the company as Canbank Mutual Fund, rebranding it in 2007 after partnering with Robeco, which is now part of Orix.

Canara Bank first announced plans to list Canara Robeco AMC in December 2023. The IPO process gained momentum with approvals in March 2024, and the Union Department of Financial Services granted its consent for the AMC's IPO in October 2024. The bank has since completed the request-for-proposal (RFP) process for Canara Robeco AMC’s IPO. Meanwhile, Canara Bank’s MD and CEO, K. Satyanarayana Raju, revealed in July 2024 that the selection of a merchant banker for the Canara HSBC Life Insurance IPO was nearing completion.

Should Canara Robeco AMC be listed, it will join HDFC AMC, UTI AMC, Aditya Birla Sun Life AMC, and Nippon Life India AMC as the fifth publicly traded mutual fund company in India.

The planned IPOs aim to help Canara Bank monetize its investments in these subsidiaries while ensuring compliance with the RBI’s directive to reduce its promoter stakes in the asset management and insurance businesses within the stipulated timeline.