HDFC Bank cleared to acquire up to 9.5% stake in IndusInd Bank amid recent challenges; shares in focus
CHENNAI: HDFC Bank has received approval from the Reserve Bank of India to acquire up to a 9.5 percent stake in IndusInd Bank, marking a significant development in the private banking space, the latter informed stock exchanges. The regulatory clearance allows HDFC Bank, India’s largest private sector lender, to purchase shares of IndusInd Bank either through market transactions or other permitted routes, subject to applicable norms and disclosures.
The approval underscores the RBI’s consent for HDFC Bank to hold a strategic investment in another private lender, while stopping short of any change in management control. Market participants view the move as a financial investment rather than a precursor to a merger, given regulatory restrictions on ownership and control in the banking sector.
HDFC Bank stock slipped 0.1 percent to Rs 995.10. It has outperformed the broader market so far this year, gaining 11.7 percent compared with a 9.2 percent rise in the Nifty 50 over the same period. The lender’s market capitalisation stands at approximately Rs 7.63 lakh crore as of now. While, shares of IndusInd Bank fell 0.5 percent to Rs 846.95, extending their underperformance in 2025. The stock has declined 12.6 percent year-to-date and commands a market capitalisation of about Rs 66,000 crore.
IndusInd Bank, a mid-sized private sector lender with a strong presence in vehicle finance, corporate banking and retail lending, has been navigating a challenging operating environment marked by tighter liquidity conditions and evolving regulatory requirements. An investment by HDFC Bank is seen as a vote of confidence in IndusInd Bank’s long-term fundamentals and business model.
IndusInd Bank has been under investor scrutiny in recent months following a period of sharp share price volatility triggered by concerns over losses and lapses in disclosures. The bank had earlier reported higher-than-expected stress in parts of its loan book, which weighed on profitability and raised questions about asset quality trends. This was compounded by market unease over the timing and adequacy of certain disclosures, prompting regulators and investors to closely track governance standards and transparency at the lender.
While the bank has reiterated its commitment to strengthening internal controls, improving disclosure practices and stabilising earnings, these challenges have continued to cloud near-term sentiment around the stock even as its core franchise remains intact.
For HDFC Bank, the approval provides flexibility to deploy capital into a banking asset that could offer strategic and financial returns over the medium to long term. Analysts note that the investment could also allow HDFC Bank to benefit from sectoral growth without materially impacting its capital adequacy or core lending focus.
The RBI approval is subject to standard conditions, including compliance with shareholding thresholds, reporting requirements and timelines for acquisition. Any increase in stake beyond the approved limit would require fresh regulatory clearance.
The development comes at a time when the banking sector is witnessing heightened regulatory scrutiny and consolidation discussions, with investors closely tracking capital allocation decisions by large lenders. Shares of both banks are expected to remain in focus as markets assess the potential implications of the proposed investment.