Canara Bank shares in focus as RBI approves stake sale plan in its mutual fund and life insurance ventures

Shares of the public sector bank held by Rekha Rakesh Jhunjhunwala are in focus in Friday's session (December 6) after the lender on the previous day said that it has received the RBI's go-ahead for a proposal to divest the bank's stake in life insurance and mutual fund ventures.

Reserve Bank of India vide its letter dated 5th December 2024 has accorded approval to our bank for divesting its shareholding in Canara Robeco Asset Management Company and Canara HSBC Life Insurance Company by 13 per cent and 14.5 per cent, respectively through Initial Public Offer (IPO), Canara Bank said in a regulatory filing.

Further, RBI has intimated that in accordance with the exemption granted by the Government of India, the bank should adhere to the October 31, 2029 timeline for bringing its stake in these entities up to 30 per cent.

Canara HSBC Life Insurance Company, established in 2008, is a joint venture company with a 51 per cent stake owned by Canara Bank and a 26 per cent stake held by the HSBC Insurance (Asia Pacific) Holdings and remaining 23 per cent stake by Punjab National Bank (PNB).

In the case of mutual fund business, Canara Bank also owns 51 per cent stake in Canara Robeco Asset Management Company while Japan's Orix Corporation holding has the remaining stake in the AMC.

Canara Robeco Asset Management Company is the country's second oldest asset manager. The state-run lender had floated the company in 1993, partnering with Robeco, now part of Orix, in 2007.

Canara Bank shareholding

As of the quarter ended September, Rekha Rakesh Jhunjhunwala owns 1.42 per cent stake in the company. On the other hand, FIIs in the counter reduced their holding from 11.91 to 11.26 per cent in the September quarter.

Canara Bank share price performance

The stock in the last one year has gained over 24 per cent, while its 3-year return is at 162 per cent.