In a significant regulatory move, the Reserve Bank of India (RBI) has granted permission to Emirates NBD to establish a wholly-owned subsidiary in India. This decision could have far-reaching implications, especially in the context of the ongoing strategic stake sale in IDBI Bank.
Emirates NBD, one of the largest banking groups in the Middle East, already operates branches in Mumbai, Chennai, and Gurgaon. However, the latest approval from the RBI for a 100% wholly-owned subsidiary allows it greater regulatory compliance and local presence, which could be a stepping stone toward expanding its footprint in the Indian banking sector.
Currently, the Government of India and Life Insurance Corporation (LIC) are jointly seeking to divest a 60.72% stake in IDBI Bank. This strategic sale has attracted the attention of two key bidders: Emirates NBD and Fairfax Financial Holdings. However, regulatory challenges could place Fairfax at a disadvantage. Fairfax already holds a stake in CSB Bank, and RBI's guidelines generally discourage a single promoter from holding controlling interests in more than one bank.
This gives Emirates NBD a potential edge in the race. Observers are drawing parallels with the earlier case of DBS Bank, which acquired Lakshmi Vilas Bank after being allowed to set up a wholly-owned subsidiary in India by the RBI. This precedent suggests that the central bank is keen on having greater regulatory oversight through wholly-owned subsidiaries when it comes to foreign banks acquiring Indian banking entities.
Another factor in favor of Emirates NBD is the RBI’s preference for a regulatory framework that allows tighter control and alignment with Indian financial policies. The creation of a wholly-owned subsidiary structure helps achieve that objective.
Given these developments, market speculation is rife that Emirates NBD could emerge as the successful bidder in the IDBI Bank stake sale. In fact, following the news of RBI’s approval, shares of IDBI Bank rose by nearly 3%, trading at ₹92.80, indicating positive investor sentiment.
The Department of Investment and Public Asset Management (DIPAM) Secretary had earlier stated that the IDBI stake sale is expected to be completed within the calendar year 2025.
Disclaimer:
The information provided in this blog is for informational purposes only and should not be considered as financial or investment advice. Readers are advised to conduct their own research or consult a qualified financial advisor before making any investment decisions. The author and the blog are not responsible for any financial losses or actions taken based on the content of this article.
