HDFC buys additional stake in insurance firm HDFC ERGO to make it an arm

According to RBI rules, a bank can hold either below 30 per cent or above 50 per cent stake in insurance ventures

HDFC Ltd has increased its stake in the HDFC Ergo – the general insurance venture of the home financier – above 50 per cent, ahead of the merger with HDFC Bank.

“…Corporation has today acquired 36,42,290 equity shares of HDFC ERGO representing 0.5097 per cent of its total issued and paid-up share capital from ERGO International AG, the other promoter of HDFC ERGO,” HDFC said in a notification to the exchanges.

Post the stake increase, HDFC will hold 50.5 per cent stake in the general insurance company, which will become a subsidiary of HDFC. Post the merger with HDFC Bank, HDFC’s stake in Ergo will be transferred to the bank. The insurance regulator and other authorities approved the proposal to increase stake earlier.

According to Reserve Bank of India (RBI) rules, a bank can hold either below 30 per cent or above 50 per cent stake in insurance ventures.