HDFC Bank Group gets RBI nod to buy up to 9.5% stake in ICICI Bank, 5 others 

The Reserve Bank of India (RBI) has approved HDFC Bank Group’s proposal to acquire up to 9.5% stake in ICICI Bank and five other private banks. 

HDFC Bank Ltd and group entities including HDFC Mutual Fund, HDFC Life Insurance Co. Ltd, HDFC ERGO General Insurance Co. Ltd have been given the nod to buy “aggregate holding” of up to 9.50% of the share capital or voting rights in Axis Bank, Suryoday Small Finance Bank, ICICI Bank, Bandhan Bank, Yes Bank, and IndusInd Bank, the lender informed the stock exchanges. 

The RBI approval to the application dated 18 December came on 5 February,  India’s largest private bank said in the exchange filing. 

The filing did not disclose the current shareholding of HDFC Bank Group in the six banks. 

The application was made by HDFC Bank as a promoter or sponsor of the Group. 

The RBI nod to acquire a stake in IndusInd Bank is intended for investments by HDFC Asset Management Company and HDFC Life Insurance, HDFC Bank clarified in a CNBC-Awaaz report.

RBI’s approval is valid for one year from the date of the letter, according to the terms of the approval. 

HDFC Bank Group shall ensure that the “aggregate holding” in the above‐mentioned banks does not exceed 9.50% of the paid‐up share capital or voting rights of the respective banks, at all times, the apex bank said in its approval letter.

If the “aggregate holding” falls below 5%, prior approval of RBI will be required to increase it to 5% or more of the paid-up share capital or voting rights. 

“Aggregate holding” includes shareholding by the bank, entities under the same management, mutual funds, trustees, and promoter group entities. 

“In view of the same, whilst HDFC Bank does not intend to invest in these banks, since the “aggregate holding” of HDFC Bank group was likely to exceed the prescribed limit of 5%, an application seeking approval of RBI for increase in investment limits was made,” HDFC said. 

“Further, since the RBI directions are applicable to HDFC Bank, the lender had made the application to RBI on behalf of the Group,” it added.