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The Reserve Bank of India (RBI) has approved SBI Mutual Fund, a division of the State Bank of India, the largest state-run lender in the nation, to purchase up to a 9.99 per cent share of Karur Vysya Bank, according to a regulatory filing on Friday, August 23.

Exchange notified

Karur Vysya Bank notified the exchanges that 'the RBI has accorded its approval to SBI Mutual Fund (SBI MF) for acquiring aggregate holdings of up to 9.99 per cent of the paid-up share capital or voting rights' in a letter dated August 23, 2024.

It was noted that the approval was given in relation to the application submitted to the RBI (Reserve Bank of India) by the State Bank of India Mutual Fund (SBI MF).

Cancellation of approval

The filing further stated, 'This approval shall stand cancelled if SBI MF fails to acquire major shareholding within a period of one year from the date of RBI's letter.'

SBI MF, however, was required to make sure that the total amount of shares held in the bank never exceeded 9.99 per cent of the voting rights or paid-up share capital, according to the statement.

The filing also said that prior approval from the RBI will be needed to raise the aggregate holding to 5 per cent or more of the paid-up share capital if it falls below that threshold.

Notably, Karur Vysya Bank has a market capitalisation of Rs. 17,879 crore and is a listed private lender. Its main business areas are retail, corporate, and treasury banking, and its headquarters are in Karur, Tamil Nadu.

Stock movement

The RBI's approval of SBI MF's acquisition of a stake in the bank was announced on Friday after market hours. Shares of the lender had finished the day lower, closing at Rs. 222.45, down 0.42 per cent. The stock has gained about 30 per cent so far this year.