PNB withdraws process of divestment of stake in Canara HSBC Life Insurance

Punjab National Bank (PNB) stated on Wednesday that it has withdrawn the process of divestment of its stake in the Canara HSBC Life Insurance. The bank had stated in May 2021 that it intends to divest its stake in the insurance company at an appropriate time depending upon market conditions and available options.  

In a filing it said, “The Exchange is hereby informed that on account of recent IRDAI Notification dated 05.12.2022 on IRDAI (Registration of Indian Insurance Companies) Regulations, 2022, the Board of Directors of the Bank in its meeting held on 28.02.2023, has accorded approval for withdrawal of the process for divestment of Bank's stake in Canara HSBC Life Insurance Co. Ltd. The Bank shall hold its stake in the Company as an investor, subject to regulatory approvals.”

However, a top official of the lender had told Hindu Businessline earlier this year that they are rethinking the divestment of its stake in the insurer. 

The official told the news site that since IRDAI has now permitted a bank to move from promoter category to investment category if the holding is up to 25 per cent, it will rethinking its plans of divestment as PNB currently has an equity stake of 23 per cent in Canara HSBC Life Insurance and hence can move its holding to investment category without having to divest its stake. 

The regulator had earlier stipulated that a bank cannot be a promoter of two life insurers and should bring down its holding in one to 10 per cent. 

The official said that the change in guidelines by IRDAI prompted them to rethink their strategy. 

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