RBI Grants HDFC Bank Group Approval For Up To 9.5% Stake In IndusInd Bank

IndusInd Bank Ltd. stated in an exchange filing on Monday, that the Reserve Bank of India has authorized the HDFC Bank Group to obtain a combined stake of up to 9.5 per cent in its paid-up share capital or voting rights.

However, as per the exchange filing, If the applicant fails to acquire major shareholding within one year, the RBI approval stands cancelled. "The RBI, while granting the approval has also conveyed that if the applicant fails to acquire major shareholding within a period of one year from the date of the aforesaid RBI letter, the approval shall stand cancelled," the filing read.

HDFC Bank clarified to CNBC-TV18 that the stake acquisition in IndusInd Bank is designated for the HDFC Group, not specifically for HDFC Bank. As the promoter, HDFC Bank sought approval from the RBI, specifying that it pertains to investments by its Asset Management Company (AMC) and Insurance arms in IndusInd Bank.

The RBI approval is contingent upon adherence to the Banking Regulation Act, 1949, RBI's Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023, provisions of the Foreign Exchange Management Act, 1999, Securities and Exchange Board of India regulations, and other relevant statutes, regulations, and guidelines.

The filing also noted that the applicant must maintain the aggregate holding below 9.50 per cent in the Bank and seek RBI approval if it falls below 5 per cent before increasing it to 5 per cent or more. "Further, the applicant shall ensure that the 'aggregate holding' in the Bank does not exceed 9.50 per cent of the paid-up share capital or voting rights of the Bank, at all times. If the “aggregate holding” falls below 5 per cent, prior approval of the RBI will be required to increase it to 5 per cent or more of the paid-up share capital or voting rights of the Bank."

On an annual basis, the shares of IndusInd Bank have soared to more than 36 per cent or 402 points on the National Stock Exchange.