The shares of RBL Bank hit a 52-week high on Wednesday as Mahindra & Mahindra Limited picked up around 3.53 per cent stake for Rs 417 crore in the Mumbai-headquartered bank with prospects of further raising its stake in the future.

RBL closed at Rs 238.80 on the Bombay Stock Exchange, up 7.13 per cent over the previous close.

The bank in a clarification to the stock exchanges said there are no present negotiations that require disclosure under SEBI LODR.

“We being a listed company, for trading in the shares of the bank there is no pre-approval required from the bank except for the fact that as per Master Direction - Reserve Bank of India (Acquisition and Holding of Shares or Voting Rights in Banking Companies) Directions, 2023, any shareholder who wishes to acquire 5 per cent or more of the shareholding of the bank is required to make an application to the Reserve Bank of India to seek their prior approval for such acquisition. No such application has been received by us till date,” the bank said in a statement.

Mahindra and Mahindra Financial Services said in a stock exchange filing that its holding company Mahindra and Mahindra Limited will consider further investment in the bank subject to pricing, regulatory approvals and required procedures. “However, under no circumstance, it will exceed 9.9 per cent,” the statement said.

The present RBI guidelines do not allow any single entity or group of related entities, other than the non-operative financial holding company to have shareholding or control, directly or indirectly, in excess of 10 per cent of the paid-up voting equity capital of the bank.

Any stakeholding beyond 10 per cent may require special dispensation from the regulator. The RBI has been sceptical in allowing industrial houses to secure banking licenses even as an internal working group of the RBI led by P.K. Mohanty in 2020 had recommended that large corporate/industrial houses may be permitted to promote banks after suitable amendments to the Banking Regulations Act to deal with connected lending between banks and other financial and non-financial group entities.

The licensing guidelines however allow promoter/promoter groups with an existing NBFC of Rs 5 billion or above to convert to a bank.