The Reserve Bank of India (RBI) has given HDFC Bank permission to acquire up to a 9.5% stake in AU Small Finance Bank. This approval, dated January 3, 2025, allows HDFC Bank and its group entities—including HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC ERGO General Insurance, and HDFC Securities—to purchase up to 9.5% of AU Small Finance Bank’s paid-up share capital or voting rights.
The acquisition must be completed within one year from the date of approval, failing which the RBI’s approval will be automatically cancelled. This development was shared by AU Small Finance Bank in an official exchange filing.
In addition to this, HDFC Bank has informed stock exchanges that it has also received RBI approval to acquire up to a 9.5% aggregate stake in Kotak Mahindra Bank and Capital Small Finance Bank. Similar to AU Small Finance Bank, the approval for these acquisitions is valid for one year, until January 2, 2026.
The RBI has mandated that HDFC Bank and its group entities must ensure their combined holding does not exceed 9.5% of the paid-up share capital or voting rights of these banks at any time.
Under the RBI Directions 2023, the term “aggregate holding” includes shares held by the bank, its affiliates, mutual funds, trustees, and promoter group entities. While HDFC Bank does not plan direct investments in these banks, the group’s aggregate holdings may surpass the 5% limit. This prompted HDFC Bank to seek the RBI’s approval to raise its investment limit.
