Canara Bank has got the Reserve Bank of India's (RBI) approval for a proposal to divest the bank's stake in life insurance and mutual fund ventures.

The central bank’s nod came in a letter dated December 5. The approval is for Canara Bank to divest its 13% shareholding in Canara Robeco Asset Management Company and 14.5% in Canara HSBC Life Insurance Company through the initial public offering (IPO) route.

Further, RBI has intimated that in accordance with the exemption granted by the Government of India, the bank should adhere to the October 31, 2029 timeline for bringing its stake in these entities up to 30%.

Canara Bank owns 51% stake in Canara HSBC Life Insurance Company while 26% is held by HSBC Insurance (Asia Pacific) Holdings. The remaining 23% stake is held by Punjab National Bank (PNB). Canara HSBC Life Insurance Company was set in 2008.

In the case of mutual fund business, Canara Bank owns 51% in Canara Robeco Asset Management Company while Japan's Orix Corporation holds the remaining stake in the AMC.

Canara Robeco Asset Management Company is the country's second oldest asset manager. The state-run lender had floated the company in 1993, partnering with Robeco, now part of Orix, in 2007.