SBI Mutual Fund Gets Green Light to Buy Big Stake in Karur Vysya Bank: What This Means for the Banking Sector

On August 23, Karur Vysya Bank (KVB) announced that the Reserve Bank of India (RBI) has approved SBI Mutual Fund (SBI MF) to buy up to 9.99% of its shares. This strategic move allows SBI MF to increase its stake in KVB, enhancing its position in the banking sector, according to CNBC-TV18.

The approval from RBI came in a letter dated August 23, 2024, in line with the rules set by the Securities and Exchange Board of India (SEBI). However, SBI MF must follow all banking and financial regulations, including the Banking Regulation Act of 1949 and the Foreign Exchange Management Act of 1999.

Karur Vysya Bank’s share price fell slightly, closing at ₹222.20 on August 23, 2024, on the BSE. The bank’s market capitalization stands at ₹17,779.06 crore. KVB’s stock hit its 52-week high of ₹232.75 on July 31, 2024.

KVB also noted that SBI MF has one year from the date of the RBI’s letter to acquire the shares. If they fail to do so within this period, the approval will be canceled. Additionally, if SBI MF’s stake drops below 5%, they must get new approval from the RBI to increase it again.

Recently, SBI Mutual Fund also launched a new thematic fund, the SBI Innovative Opportunities Fund, which was open for public subscription from July 29 to August 12, 2024.