HDFCBANK

The People's Bank of China (PBC), China's central bank, faces an unusual predicament regarding its stake in

as India's largest private lender gears up for its first-ever bonus share issuance. According to legal experts, PBC could find its entitlements caught in regulatory uncertainty over Press Note 3, a circular issued by the Indian government in 2020, primarily seen as an attempt to curb Chinese investments in India. The board of HDFC Bank will on July 19 take up the bonus issue proposal along with the results for the June quarter. The ambiguity arises because Press Note 3 mandates prior government security clearance for any fresh allotment of shares to Chinese entities. While a bonus issue does not involve new capital inflow or a change in shareholding percentage, legal experts say the sheer increase in the number of shares held by PBC could technically trigger the regulation.