HDFC Bank to buy up to 10% in Go Digit Life for Rs 50-70 cr

HDFC Bank on Thursday said it will acquire up to 10% in Go Digit Life Insurance for an amount ranging between Rs 50 crore and Rs 70 crore.

“…HDFC Bank Limited on August 24, 2022 has entered into an indicative and non-binding term sheet with Go Digit Life Insurance Limited which summarizes the principal terms of a proposed investment, by HDFC Bank in the company, of an amount between Rs 49.9 crore to Rs 69.9 crore, in two tranches, by subscribing to equity shares of the company, for an equity stake of up to 9.944% of the paid-up equity share capital of the company, subject to execution of definitive agreements whose terms and conditions are to be mutually agreed upon, and fulfilment of other terms and conditions,” the bank said in a communication to the stock exchanges.

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Go Digit Life is yet to receive a certificate of registration from the Irdai. The company will engage in the life insurance business once it receives the same, HDFC Bank said.

Fairfax Financial Holdings-backed Digit Insurance has applied for a licence to carry out the life insurance business, according to an April 2022 report by The Times of India. The company currently offers products in the motor, travel, property and health insurance segments under the brand name Go Digit General Insurance.

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In December 2021, Irdai had directed Go Digit General Insurance to discontinue a product offering life insurance benefits and to withdraw all advertisements for the product. Irdai said a show-cause notice was issued to the company in August 2021 as deficiencies were observed in complying with the provisions of the Insurance Act, according to a Press Trust of India report.

One of the terms of HDFC Bank’s proposed merger with its parent Housing Development Finance Corporation (HDFC) is awaiting clearance from the insurance and banking regulators. The group has requested it to let the bank own 50% in HDFC’s life insurance subsidiary.