RBI greenlights HDFC Bank's proposal to acquire up to 9.5% stake in IndusInd Bank

RBI gives nod: IndusInd Bank on Monday announced that the Reserve Bank of India (RBI) has granted approval to HDFC Bank to purchase an "aggregate holding of up to 9.50 per cent of the paid-up share capital or voting rights" in the bank.

The approval from the RBI follows HDFC Bank's application to the regulator, with the validity of the approval extending for one year. Should HDFC Bank fail to acquire the stipulated shareholding within this timeframe, the approval will be deemed cancelled.

The RBI's nod is contingent upon adherence to relevant provisions outlined in 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, FEMA, SEBI regulations, and other applicable regulations.

Moreover, HDFC Bank must ensure that its "aggregate holding" in IndusInd does not surpass 9.50 percent of the paid-up share capital or voting rights of IndusInd at any given time. 

Should the "aggregate holding" dip below 5 percent, prior approval from the RBI will be mandatory to increase it to 5 percent or more of the paid-up share capital or voting rights of IndusInd.

As per the shareholding pattern of IndusInd Bank, promoters IndusInd International Holdings Ltd and IndusInd Ltd collectively hold a 16.45 per cent stake in the bank. Mutual funds collectively possess a 15.63 per cent stake in the bank as of December 2023, while insurance companies, including LIC, hold a 7.04 per cent stake. Foreign portfolio investors together hold a 38.24 percent stake as of the December quarter.

IndusInd Bank shares settled marginally higher at Rs1,539.25 per share on Monday, February 5, 2024.