HDFC Bank Receives RBI Approval To Acquire Up To 9.5 Per Cent Share In Kotak Mahindra Bank, Capital And AU Small Finance Banks

However, if the acquisition is not completed within the mentioned timeframe, the approval for the deal will lapse, the banking regulator noted.

The private lender informed that this approval remains valid till January 2, 2026.

Source : PTI

The Reserve Bank of India (RBI) has given its approval to HDFC Bank for acquiring a stake in the AU Small Finance Bank, along with some other lenders. The central bank has permitted HDFC Bank to acquire up to 9.5 per cent share in the AU Small Finance Bank, Kotak Mahindra Bank, and Capital Small Finance Bank within a year from the approval date.

However, if the acquisition is not completed within the mentioned timeframe, the approval for the deal will lapse, the banking regulator noted. Issuing an official filing with the stock exchanges, the HDFC Bank shared the central bank’s approval letter, dated January 3, 2025, reported Business Standard.

The letter noted that it provides permission to HDFC Bank and its group companies, including HDFC Mutual Fund, HDFC Life Insurance, HDFC ERGO General Insurance, HDFC Securities, and HDFC Pension Management, to collectively purchase up to 9.5 per cent of the paid-up share capital or voting rights in Kotak Mahindra Bank, AU Small Finance Bank and Capital Small Finance Bank.

The private lender informed that this approval remains valid till January 2, 2026.

 

The RBI Directions 2023 state that ‘aggregate holding’ includes shares owned by the bank, its affiliates, trustees, mutual funds, and promoter group entities. The HDFC Bank noted that it doesn't intend to invest in these banks directly. However, the bank also informed that it has to ensure that the collective ownership by its group entities in these banks does not surpass the 9.5 per cent limit set by the central bank. 

As the lender felt that the 'aggregate holding' of its group entities would surpass 5 per cent, it submitted an application to gain approval from the central bank to increase investment limits.