On Tuesday, HDFC Bank announced that it has received approval from the RBI to acquire stakes of up to 9.5 percent in six banks, including ICICI Bank and Axis Bank, for both itself and its affiliated entities such as mutual funds and insurance companies.
HDFC Bank, the country's largest private lender, will acquire stakes in Axis Bank, ICICI Bank, YES Bank, Suryoday Small Finance Bank, IndusInd Bank, and Bandhan Bank.
The HDFC Bank group includes entities such as HDFC Mutual Fund, HDFC Life Insurance Company, HDFC ERGO General Insurance Company, and others.
The RBI granted approval on February 5, 2024, following HDFC Bank's application on December 18, 2023. HDFC Bank mentioned that as the RBI directions apply to HDFC Bank, the bank made the application to the RBI on behalf of the group.
In accordance with RBI directives, HDFC Bank must ensure that its total holding in the six banks does not surpass 9.50 percent of the paid-up share capital or voting rights of each respective bank, consistently.
The RBI's approval is valid for a period of one year till February 4, 2025.
HDFC Bank stated that although it has no plans to invest in these banks, it applied for RBI approval to increase investment limits because the aggregate holding of the HDFC Bank Group was likely to surpass the prescribed 5% limit in view of the same.
IndusInd Bank's statement highlighted that if the aggregate holding falls below 5%, the bank will require RBI approval to increase the stake to 5% or more.
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