China's central bank holds a Rs 40,000 crore portfolio in India despite strained relations: Report
Mumbai: The People’s Bank of China (PBOC), the central bank of the world’s second-largest economy, has been steadily building its portfolio in Indian companies despite strained geopolitical ties between India and China, media reports said.
Data compiled by Moneycontrol from Ministry of Corporate Affairs (MCA) filings reveal that the PBOC held shares in at least 35 Indian firms at the end of FY24, with a combined portfolio value of approximately Rs 40,000 crore.
Among PBOC’s holdings, ICICI Bank emerges as the most significant investment, valued at Rs 6,139 crore, according to the report.
This is followed by HDFC Bank (Rs 5,344 crore) and Infosys (Rs 5,303 crore).
The Chinese central bank also holds Rs 1,414 crore worth of shares in Power Grid Corporation, a government-promoted entity.
The PBOC first gained attention in 2020 when it appeared in the shareholding pattern of the erstwhile HDFC Ltd (now merged with HDFC Bank) during the pandemic.
This triggered concerns over Chinese investments in India and prompted the Indian government to issue ‘Press Note 3,’ the report said.
This directive requires Chinese investors to seek government approval before investing in unlisted Indian companies.
While investments in listed companies are not restricted, the Securities and Exchange Board of India (SEBI) has previously expressed concerns about potential misuse of the Foreign Portfolio Investor (FPI) route by Chinese entities to bypass Press Note 3 regulations.
PBOC’s other major holdings in India include Rs 3,619 crore in TCS, alongside stakes exceeding Rs 1,500 crore in Kotak Mahindra Bank, Hindustan Unilever, and Bajaj Finance, the report said.
Additional investments include over Rs 1,100 crore each in Maruti Suzuki, Tata Motors, and Ultratech Cement. Other notable investments are in Bajaj Finserv, Asian Paints, and One97 Communications, Paytm's parent company.
PBOC’s association with ICICI Bank dates back to 2020 when it purchased Rs 15 crore worth of shares during a qualified institutional placement. The central bank has since increased its stake to 0.67% in the lender.
Data indicates that PBOC does not own more than 1% in any Indian company. SEBI mandates listed firms to disclose shareholders with over 1% equity.
However, companies must also file annual returns with the MCA through form MGT-7, which requires disclosure of significant foreign investors.
SEBI has implemented measures to curb FPI misuse, mandating detailed disclosure of beneficial ownership for certain FPIs in August 2023.
In July 2024, it proposed marking FPIs with over 50% Chinese investors as Land Bordering Country (LBC) entities for closer scrutiny, though final rules are pending.
Currently, 17 FPIs from China, including state-owned Best Investment Corporation and the Asian Infrastructure Investment Bank, are registered in India. Best Investment Corporation, part of China Investment Corporation (CIC), manages $870 billion globally but holds only Rs 800 crore in Indian firms like Infosys and Power Grid.
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