This was a hot topic on social media when China’s People’s Bank of China (PBOC) bought a stake in India’s HDFC Bank. Later, Congress leader Rahul Gandhi had to tweet that the government should prevent Indian companies from entering foreign hands. Let us tell you what is the whole case and how true it is.
In fact, China’s central bank People’s Bank of China (PBOC) bought a total stake in Housing Development Finance Corporation Limited (HDFC), India’s largest housing finance company, for a total of 1.01 percent in the March quarter.
NOT HDFC BANK, it’s a different company
In fact, HDFC Bank and Housing Development Finance Corporation Limited (HDFC) are different companies. HDFC is actually the parent company of HDFC Bank, but now both are different corporate units. Buying shares in HDFC does not mean that someone has bought a stake in HDFC Bank. Therefore, the concern swelled on social media, in this case, is unnecessary and lack of information.
According to BSE, china’s central bank’s share in HDFC fell to 1.75 crore shares in the last quarter of the previous fiscal. However, HDFC also had a 0.8 percent stake in The PBOC until March 2019. This means that the Chinese bank’s share in HDFC has risen by just 0.21 percent in a year. Even after the share surge, the Chinese central bank’s share in HDFC is just 1.01 percent.
It is noteworthy that HDFC already has a higher share of many foreign companies or entities. These include the Invesco Oppenheimer Developing Market Fund (3.33 percent), the Singapore government (3.23 percent) and the Vanguard Total International Stock Index Fund (1.74 percent).
ICICI Prudential Life Insurance Company has a 1.20 percent stake in India’s big partners. It has the largest (9.52 percent in total) stake in 37 mutual funds. After every quarter, listed companies are required to inform the exchange who has more than 1 percent of its shareholders.
Social media wreaks havoc
As the news came, a lot of uproars were on social media on Sunday. There was so much talk that Congress leader Rahul Gandhi and Swadeshi Jagran Manch’s national co-convener Ashwani Mahajan had to tweet and request PM Narendra Modi and Finance Minister Nirmala Sitharaman not to allow Indian institutions to be owned by foreign hands.
Most people were confused about the fact that the Chinese bank had bought an HDFC bank’s stake. In a tweet, Bollywood actor Ajaz Khan said, China’s central bank has bought a stake in HDFC Bank.
Central bank of China took the benefit of pandemic and bought 2977 Crore worth HDFC Bank shares. Government of India should take preventive measures and avoid foreign government investments in key sectors.
— Ajaz Khan (@AjazkhanActor) April 12, 2020
In a tweet on Sunday evening, Congress leader Rahul Gandhi said that the economic sluggishness in the country has weakened Indian corporate companies considerably, which is why they are becoming targets for takeovers. The government should not allow a foreign company to acquire rights over an Indian company in the event of this crisis.
The massive economic slowdown has weakened many Indian corporates making them attractive targets for takeovers. The Govt must not allow foreign interests to take control of any Indian corporate at this time of national crisis.
— Rahul Gandhi (@RahulGandhi) April 12, 2020
In fact, HDFC shares declined 32.29 percent in the March quarter due to weak commitment. HDFC shares closed at around Rs 1702 until trading closed on Thursday. The stock was trading around Rs 2,500 in January.
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