Additionally, HDFC Bank revealed that it has obtained RBI approval to purchase a maximum of 9.5 percent of Kotak Mahindra Bank and Capital Small Finance Bank.
The largest private lender in India, HDFC Bank, has been given permission by the Reserve Bank of India (RBI) to purchase up to 9.5 percent of AU Small Finance Bank within a year of the clearance date. The approval will expire if the transaction is not completed within this period.
The central bank’s letter, dated January 3, 2025, permits HDFC Bank and its group companies, such as HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC ERGO General Insurance, and HDFC Securities, to jointly buy up to 9.5 percent of AU, according to a regulatory filing made by AU Small Finance Bank.
In a further release, HDFC Bank revealed that it has also obtained RBI approval to purchase a share of up to 9.5 percent in Capital Small Finance Bank and Kotak Mahindra Bank. Until January 2, 2026, this approval is still in effect.
Nonetheless, the bank has to make sure that the total ownership of these institutions by its group of companies which will never goes over the 9.5 percent mark. In accordance with the RBI Directions 2023, “aggregate holding” refers to the shares held by the bank, its affiliates, mutual funds, trustees, and promoter group companies.
Despite its lack of intention to directly participate in these banks, HDFC Bank’s group companies’ combined holdings may exceed the 5 percent cap. The bank requested regulatory approval to increase its investment limit in order to solve this.
In light of the January 3 widespread selloff, HDFC Bank’s stock fell 2.5 percent to settle at Rs 1,749. According to Moneycontrol data, trading volumes were also high, with 1 crore shares changing hands—more than the 94 lakh shares that were traded on a weekly and monthly average.
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