HDFC Bank merger: As of Wednesday, at least 60 equity mutual fund schemes have total exposure to HDFC Bank and HDFC Bank that has crossed the 10% cap.
With the HDFC Bank and HDFC merger date getting closer, the dilemma of mutual funds is increasing. Actually, there is a significant share of funds in both the institutions, in such a situation, in case of merger, the share of funds in the new financial institution may exceed the prescribed limit.
According to media report, that market regulator SEBI is making up its mind not to give exemption to mutual funds for holding more than the limit. In such a situation, it is possible that the fund will have to reduce its stake within the stipulated time period. In such a situation, the selling of the stock will also affect the prices.
The merger will be completed in the next few weeks.
The merger will be completed in the next few weeks, which will create the country’s second largest financial institution after State Bank of India. However, at the same time, such funds whose stake is more than the prescribed limit will also be under pressure to reduce their stake and its effect will be seen on the stock of the merged institution.
As per SEBI regulations, a mutual fund scheme cannot invest more than 10% in a single security. However, exchange-traded funds and funds investing in specific sectors are exempted from this. As of Wednesday, the total exposure of at least 60 equity mutual fund schemes to HDFC Bank and HDFC has crossed the stipulated limit of 10%.
What are the options with the funds
A source said that Sebi may consider the breach of this limit as a “passive breach”, as there is no deliberate attempt to break the rules. This situation has arisen because of the merger. In such cases, the fund has 30 days to rebalance its portfolio, which can be further extended by 60 days, failing which the mutual fund may face regulatory action, the source said. Is.
On the other hand, another source said that if it had a widespread impact on the market, then there would have been a need to take regulatory steps, although this is not the case here. According to two executives of the mutual fund, the matter has been referred to the Association of Mutual Funds in India (AMFI). Officials said last week,
Block trade in HDFC
Block trade has been seen in HDFC today amidst ongoing discussions regarding the limit of mutual funds. Where 14.23 lakh shares have been traded at a price of 2650, the entire deal was worth Rs 377.19 crore. Today the stock is trading close to the level of 2650 with a slight gain. On the other hand, there has been a slight decline in the stock of HDFC Bank.
