RBI Clears HDFC Bank’s Plan To Acquire 9.5% Aggregate Holding in IndusInd Bank — What Does It Mean?
The approval from the RBI is valid for a period of one year, or until Dec. 14, 2026.
In a major development in the banking space, HDFC Bank Ltd. has confirmed it has received approval from the Reserve Bank of India to acquire up to 9.5% of the aggregate holding in Indusind Bank Ltd.
HDFC Bank, which is the country's largest private sector lender, confirmed on Monday night through an exchange filing that it has received RBI approval that would allow the entity to hold up to 9.5% of paid-up capital or voting rights share.
The same has been confirmed by IndusInd Bank as well, through an exchange filing. The said approval from the RBI is valid for a period of one year, or until Dec. 14, 2026.
It is important to note that this approval is relevant for mutual fund, life insurance and general insurance.
All HDFC Mutual Fund schemes, HDFC Life Insurance Company, and HDFC Ergo General Insurance can buy up to 9.5% share capital.
Given that the AMC/MF/Insurance is promoted by a bank, this approval is required by HDFC Bank in order to invest in IndusInd.
It must be noted that the 9.5% figure is merely a limit and not a direct acquisition, effectively meaning that HDFC Bank cannoot exceed owning more than 9.5% of the total paid-up share capital of IndusInd Bank.
The usage of the term 'aggregate capital' is particularly key, as it means shares held through by HDFC Bank as well as its direct subsidiaries, such as HDFC AMC, HDFC Life Insurance, and HDFC ERGO General Insurance. This is to avoid any regulatory arbitrage through multiple vehicles.
Back in February 2024, RBI had allowed HDFC Bank group to acquire a 9.5% stake in six banks, which include IndusInd Bank, Axis Bank, Suryoday Small Finance Bank, ICICI Bank, Bandhan Bank and Yes Bank
