In a major development for the Indian financial sector, the People's Bank of China has taken up 1.01 per cent stake in the lending major Housing Development Finance Corporation (HDFC).

HDFC has clarified that the Chinese central bank, Peoples Bank of China (PBOC) has been an existing shareholder of the company and only the disclosure is being made now as they hit the one per cent threshold.

HDFC's Vice Chairman and CEO Keki Mistry told IANS that the PBOC has been an existing shareholder and had owned 0.8 per cent in the company as of March 2019.

The disclosure has been made now since the stake has hit the one per cent regulatory threshold. They have been accumulating the shares over a year and are now holding 1.1 per cent.

India's bell-weather stock, HDFC Ltd, saw it's stock price fall 40 per cent from highs reached in late January.

The PBOC has bought 17.5 million shares or 1 per cent stake in HDFC. The issue is generating some traction with the entry of the Chinese central bank into the shareholder's list of one of India's marquee financial services companies.

China's central bank People's Bank of China now owns a 1.01 per cent stake in HDFC. The figure is reflected in the latest quarterly shareholding pattern of the company disclosed to the stock exchanges.

HDFC stock has been plunging and between the first week of February and the last week of March, HDFC's share price plunged 41 per cent from a 52-week high of Rs 2,500 to a 52-week low of Rs 1,473. Its last traded price was Rs 1,701.25.

In 2014, the PBOC had picked up stakes in many high profile Italian companies during the Eurozone debt crisis, when outlook on Portugal, Italy, Greece and Spain was very weak.

Note: The earlier version of the headline said that PBOC has acquired 1 per cent stake in HDFC. However, it was changed after clarification from the bank’s CEO.