The company has informed stock exchanges that its share buyback plan will be subject to approvals from its board, shareholders and other requisite approvals. It is also subject to certain clarifications and exemption from the government and amendments to the Articles of Association of HDFC.

HDFC says it will make the “actual public announcement” for the buyback only in future after requisite government clarifications and other approvals are obtained. “It is unclear at this stage as to whether such clarifications / exemptions would be granted,” HDFC said in its notice to the stock exchanges.

Based on current regulations, HDFC cannot effect a buyback since its debt equity ratio exceeds the maximum of 2:1 prescribed under Section 77A of the Companies Act, 1956. An exemption is being sought by HDFC in terms of the provisions of Section 77A of the Companies Act, 1956.

“The change in the capital adequacy norms by the National Housing Bank bringing down the risk weights is required so that after the buyback, the corporation has sufficient capital adequacy to meet with the regulations on capital adequacy prescribed by the National Housing Bank,” says HDFC.