HDFC Bank Group Allowed To Buy Up to 9.50% Stake in 6 Banks, Including Axis Bank, ICICI Bank and Yes Bank
Moneylife Digital Team 06 February 2024
Reserve Bank of India (RBI) has approved an application filed by HDFC Bank Ltd as promoter and sponsor of HDFC Bank group to acquire aggregate holding of up to 9.50% of the share capital or voting rights in six banks. It includes Axis Bank Ltd, Suryoday Small Finance Bank Ltd, ICICI Bank Ltd, Bandhan Bank Ltd, Yes Bank Ltd and IndusInd Bank Ltd.
 
In a regulatory filing, HDFC Bank says, "RBI's approval is valid for one year from the date of RBI's letter, i.e., till 4 February 2025. Further, HDFC Bank says it will 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."
 
As per RBI directions on the acquisition and holding of shares or voting rights in banking companies, 'aggregate holding' includes shareholding by the bank, entities under the same management or control, mutual funds, trustees, and promoter group entities. HDFC Bank group includes HDFC Mutual Fund, HDFC Life Insurance Company Ltd, HDFC ERGO General Insurance Company Ltd and others.
 
"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. Further, since the RBI directions is applicable to HDFC Bank, the Bank had made the application to RBI on behalf of the group," it clarified.
 
Further, HDFC Bank says, investments by the group are in the normal course of business of the respective group entities.
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