HDFC Bank has said the Reserve Bank has granted it permission to acquire up to a 9.5 percent stake in rival lender Kotak Mahindra Bank, as also AU Small Finance Bank and Capital Small Finance Bank.
In a regulatory filing, HDFC Bank on Saturday said that the RBI on January 3, allowed it increase its state in these entities held through its subsidiaries to 9.5 percent from the present level. HDFC Bank holds shares of these companies through its subsidiaries--HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC Ergo General Insurance, and HDFC Securities.
The permission, valid for a year from the approval date (January 3), is to collectively purchase up to 9.5 percent of these companies paid-up share capital or voting rights. If the acquisition is not finalised within this timeframe (until January 2, 2026), the approval will lapse, the bank said in the filing.
However, the bank must ensure that the combined ownership by its group entities in these institutions does not exceed the 9.5 percent threshold at any point. According to a 2023 RBI circular, "aggregate holding" includes shares owned by the bank, its affiliates, mutual funds, trustees, and promoter group entities.
Although HDFC Bank does not intend to directly invest in these banks, the collective holding of its group companies could surpass the 5 percent cap currently. To address this, the bank sought regulatory clearance to raise its investment limit last September.