Indian mortgage lender Housing Development Finance Corporation (HDFC) sold a 3% stake in private lender Bandhan Bank in a bulk deal worth around $200m.

According to the data on the Bombay Stock Exchange, HDFC sold over 49.63 million shares in the bank for INR306.61 ($4.04) apiece.

At the end of December 2021, the mortgage lender controlled around a 9.9% stake in Bandhan Bank.

Recently, HDFC sold a 1.5% stake in the bank and with the latest divesture, HDFC’s stake in the private lender is around 5%.

The data on BSE showed French banking group Societe Generale bought more than 19.08 million shares in Bandhan Bank.

It was not immediately known who bought the remaining shares.

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HDFC’s decision to dilute its stake in Bandhan Bank is part of its efforts to meet Reserve Bank of India’s guidelines, Moneycontrol reported citing a source familiar with the matter.

It is understood that HDFC will not dilute its stake in Bandhan Bank further.

The deal follows HDFC’s announcement to merge with the country’s leading private player HDFC Bank to create a banking behemoth.

Upon the completion of the merger, HDFC will have a 41% stake in HDFC Bank and the combined entity will have a balance sheet of INR17.87 trillion ($236bn) and a net worth of INR3.3 trillion ($43.73bn).

Responding to the deal, RBI Governor Shaktikanta Das said that a proposal for the merger of HDFC and HDFC Bank has been received, which is under examination.