A Chinese national flag flies at the headquarters of the People's Bank of China, the country's central bank, in Beijing, the logo of ICICI Bank is also embedded in the image

New Delhi: In April of this year, investment by the People's Bank of China in India's largest mortgage lender HDFC created an uproar. Opposition parties dubbed it an opportunistic takeover of Indian firms by China amid the coronavirus pandemic.

Almost four months after enhancing its stake in major private non-banking finance company HDFC Ltd., the People's Bank of China has bought shares of India's ICICI Bank, one of the country's leading private banks.

Participating in a fundraising exercise for ICICI, the Chinese central bank bought shares worth $2 million, according to sources close to the development.

A total of over 350 global institutions participated in ICICI's fundraising through qualified institutional placement (QIP) to raise $2 billion last week.

QIP is a way of fundraising by offering shares to eligible investors at a particular stock price.

The other institutions that bought shares in the bank include domestic mutual funds and insurance funds as well as foreign institutions. The government of Singapore too has made investment in the offer.

Amid the COVID-19 pandemic in India, companies are opting to take the stock route to raise funds. HDFC also plans to raise at least $1.86 billion via QIP.

India's top corporate firm Reliance Industries also raised $5.7 billion via an allotment of shares to existing shareholders.

The stock purchase by the People's Bank of China in ICICI is very small and won't require any regulatory compliance, indicated the source, claiming that this is the reason why the Chinese bank's investment in ICICI has not become an issue like its investment in HDFC Ltd in April of this year.

This April, the People's Bank enhanced its stake in HDFC Ltd., taking it over the regulatory threshold of 1 percent. Investments of over 1 percent require regulatory disclosure on the part of the receiving company as per guidelines. It became a major issue the moment HDFC Ltd. made an announcement about the same and India's principal opposition party Congress raked up the issue of China making opportunistic takeovers of Indian companies in the wake of the COVID-19 pandemic.

Within weeks of the Chinese central bank's investment in HDFC Ltd., India on 17 April changed foreign direct investment norms imposing restrictions on China.

Simultaneously, border tension started building up between India and China in Ladakh leading to a bloody skirmish on 15 June in which 20 Indian Army soldiers lost their lives.

Since then business and trade relations between the two countries have soured. India retaliated against China on the business and trade tariff front, banning over a hundred Chinese apps and imposing tariffs on about 80 products.