HDFC Bank Gets Approval from RBI to Acquire 9.50% stake in AU Small Finance Bank

Reserve Bank of India (RBI) has given a go-ahead to HDFC Bank to acquire a 9.50% stake in AU Small Finance Bank within one year from the date of the central bank’s approval letter. If the acquisition is not completed within the prescribed time, the approval will be deemed as cancelled.

In an exchange filing the bank said, “AU Small Finance Bank (SFB) has received a copy of an RBI letter dated January 3, 2025, addressed to HDFC Bank Limited, granting approval for HDFC Bank and its group entities (including HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC ERGO General Insurance, and HDFC Securities) to acquire up to 9.50% of AU SFB's paid-up share capital or voting rights within one year. If the acquisition is not completed within this period, the approval will be cancelled.”

HDFC Bank has also received approval from RBI to acquire close to 9.5% stake in Kotak Mahindra Bank and Capital Small Finance Bank.

The approval is valid till one year from the date of RBI’s letter, i.e. till January 2, 2026.

Additionally, HDFC Bank is required to ensure that the “aggregate holding” by its group entities in the above-mentioned banks does not exceed 9.50% of the paid-up share capital.

Under RBI’s directions “aggregate holding” includes shares held by the bank, its affiliates, mutual funds, trustees, and promoter group entities. Though HDFC Bank has no plans to invest in the aforementioned banks, the group’s shareholding may exceed the 5% limit. Notably, HDFC Bank dialed RBI to seek approval for increasing the investment limits.

During Friday’s trading session, shares of HDFC Bank ended at ₹1,748.40, down 2.53%.