The approval is valid for a year from January 3, 2025, after which it will lapse if the acquisition is not finalised.
The Reserve Bank of India (RBI) has granted HDFC Bank, India’s largest private lender, permission to acquire up to a 9.5% stake in AU Small Finance Bank (AU SFB). The approval is valid for a year from January 3, 2025, after which it will lapse if the acquisition is not finalised.
In a regulatory filing, AU SFB disclosed that the RBI’s approval extends to HDFC Bank and its group companies, including HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC ERGO General Insurance, and HDFC Securities. Together, these entities are permitted to collectively hold up to 9.5% of AU SFB’s paid-up share capital or voting rights.
HDFC Bank also announced that it has received the RBI’s nod to acquire up to a 9.5% stake in Kotak Mahindra Bank and Capital Small Finance Bank. This approval remains valid until January 2, 2026.
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However, the RBI has mandated that the total ownership by HDFC Bank and its group entities across these institutions must not exceed the 9.5% threshold. According to the RBI Directions 2023, “aggregate holding” includes shares owned by the bank, its subsidiaries, mutual funds, trustees, and promoter group entities.
Although HDFC Bank does not plan to directly invest in these banks, its group companies’ collective shareholding could surpass the 5% cap, necessitating regulatory clearance. To accommodate this, HDFC Bank sought approval to increase its investment limit.
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On January 3, HDFC Bank’s shares declined 2.5% to close at Rs 1,749, amid a broad-based market selloff. Trading volumes surged as approximately 1 crore shares were exchanged, exceeding the one-month and one-week averages of 94 lakh shares, according to Moneycontrol.
