HDFC Bank Cleared to Acquire Up to 9.5% Equity Stake in IndusInd Bank

The Reserve Bank of India (RBI) has given HDFC Bank's subsidiaries permission to purchase up to a 9.5% share in IndusInd Bank. India's biggest private sector lender by market value stated in an exchange statement on 15 December that the permission is effective for a year following the RBI's letter dated December 15, 2025. Up to 9.5% of the paid-up share capital or voting rights in IndusInd Bank may now be held by group companies, such as HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Fund, HDFC ERGO General Insurance, HDFC Pension Fund, and HDFC Securities.

HDFC Bank Clarifies No Direct Investment

HDFC Bank made it clear that it has no intention of investing directly. Because the total holdings of its group firms were anticipated to surpass the prior regulatory cap of 5%, clearance was requested. In compliance with the RBI's Commercial Banks (Acquisition and Holding of Shares or Voting Rights) Directions, 2025, the application was submitted on behalf of the group companies on October 24.

According to RBI rules, prior clearance is required for anyone wishing to buy shares that might result in a large shareholding, which is defined as 5% or more of a bank's paid-up capital or voting rights. In the submission, the bank stated that it also wanted to let the exchange know that the aforementioned approval is good for a year from the date of the RBI letter, or until December 14, 2026. Additionally, the Bank must guarantee that the "aggregate holding" in IndusInd never exceeds 9.50% of the paid-up share capital or voting rights of IndusInd.

HDFC Bank’s Current Performance

HDFC Midcap Fund, a scheme under HDFC Mutual Fund, has a 4.03% position in IndusInd Bank, valued at around INR 2,668 crore based on Monday's closing price, according to shareholding statistics for the September quarter. When combined, mutual funds own around 23% of the bank's stock.

The Government of Singapore, Government Pension Fund Global, BNP Paribas, and Life Insurance Corp. of India are additional significant investors. In an interview with Financial Express, Nitin Aggarwal, Head of BFSI-Motilal Oswal, clarified that obtaining RBI approval for HDFC Bank to grow its stake is primarily a statutory need for a financial firm to buy up to 10% of a bank. All group entities, including AMC, the pension fund, and the life insurance company, will own up to 10% of this stake. It's not that HDFC Bank is purchasing a significant amount of IndusInd Bank stock.

Raising a shareholding to 10% requires RBI permission, which the group now has. People have also witnessed numerous other mutual funds get this clearance in the past for a stake that exceeds the freely authorised limit.