Reserve Bank of India has turned down Hongkong and Shanghai Banking Corporation Ltd's plans to pick up about 20 per cent stake in UTI Bank by restricting its approval for acquisition of only 14.6 per cent stake, which has been completed on Thursday.
"The agreement with Actis (formerly CDC), which was inked on December 2 and expired on Wednesday, was to pick up 20 per stake in two tranches of 14.6 and 5.3 per cent. However, RBI allowed us to acquire only 14.6 per cent for $67.6 million (over Rs 300 crore), subject to certain conditions," HSBC India CEO Niall Booker told reporters in Mumbai.
UTI Bank has declared a dividend of 25 per cent for 2003-04 with June 1, as record date and the entire acquisition deal was concluded on Thursday. As a result, HSBC would not be eligible for dividend income of $1.8 million for its 14.6 per cent stake.
Ruling out that HSBC management was disappointed with this decision, Booker said RBI put forth three main conditions that HSBC would not acquire further stake without its nod, no directorship and certain restrictions on transactions with UTI Bank, which are viewed as strategic and not at arms length.
"We have sought RBI approval for activities of our AMC and HSBC Securities as it could involve dealing in UTI Bank shares as a third party for the schemes and clients," he said.
The foreign bank has also sought exemption for sharing the ATM network with UTI Bank, he added.
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