HDFC Bank says no to Mitsubishi Financial's $2-bn proposal to buy into NBFC arm: Report

The Japanese group, second-largest bank holding firm globally, had proposed to acquire 20 percent stake in HDB Financial Services for $2 billion, the newspaper said.

The board of India’s biggest lender HDFC Bank has decided to reject the proposal from Japan’s Mitsubishi UFJ Financial Group (MUFG) to acquire a stake in its NBFC subsidiary, the Economic Times reported on August 23.

The Japanese group, second-largest bank holding firm globally, proposed to acquire 20 percent stake in HDB Financial Services for $2 billion, the newspaper said.

The board, instead, backed a plan to go ahead with the listing of the NBFC unit, which will help it comply with the regulations laid out by the Reserve Bank of India, ET said.

The decision is likely to disappoint the establishment in Japan as Tokyo had conveyed its support for the deal as part of solidification of economic and strategic relationship between the two Quad nations, according to the report.

Monyecontrol couldn’t verify the report independently.

In April, it was reported that MUFG was in advanced talks with HDFC Bank for the deal, valuing HDB Financial Services at $10 billion. HDFC Bank holds a 95 percent stake in the non-bank arm.

MUFG’s interest in picking up a substantial stake in HDB Financial Services was seen as the Japanese financial institution’s interest in growing its presence in India. In July, news agency Bloomberg had reported that the deal was not progressing because of differences over how much say MUFG will have in company strategies.

Later in the same month, Moneycontrol had reported that HDFC Bank is in talks with private credit funds to sell a stake in its IPO-bound lending arm. The talks with domestic credit funds were part of the ongoing value discovery process for HDB Financial.