RBI approves HDFC Bank's proposal to acquire 9.5% in IndusInd Bank

In a letter dated February 5, 2024, the Reserve Bank of India (RBI) has approved the application of HDFC Bank Limited to acquire an "aggregate holding" of up to 9.5 per cent of the paid-up share capital or voting rights in IndusInd Bank Limited, according to a regulatory filing by IndusInd Bank with the BSE. The approval has been granted following the application submitted by HDFC Bank to the RBI.

The filing said that RBI's approval is subject to compliance with the relevant provisions of the Banking Regulations Act, 1949, RBI's Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023 (as amended from time to time), provisions of the Foreign Exchange Management Act, 1999, regulations issued by the Securities and Exchange Board of India, and any other statutes, regulations, and guidelines, as applicable.

Furthermore, the RBI has said that HDFC Bank needs to acquire major shareholding within one year from February 5, 2024, failing which the approval shall stand cancelled. HDFC Bank will need to ensure that its holding in IndusInd Bank does not exceed 9.50 per cent of the paid-up share capital or voting rights of the Bank, at all times. Also, if the "aggregate holding" of HDFC Bank falls below 5 per cent, prior approval of the RBI will be required to increase it to 5 per cent or more of the paid-up share capital or voting rights.

On January 25, RBI allowed Life Insurance Corporation of India (LIC) to acquire up to 9.99 per cent stake in HDFC Bank Ltd. "LIC has been advised by RBI to acquire the aforesaid major shareholding in the Bank within one year i.e. by January 24, 2025. Further, LIC must ensure that the aggregate holding in the Bank does not exceed 9.99 per cent of the paid-up share capital or voting rights of the Bank at all times," HDFC Bank said. HDFC Bank issued a clarification to CNBC-Awaaz and has said that the RBI approval is not for HDFC Bank as a standalone entity and that the word "Bank" in the disclosure should be read as the HDFC Bank Group.

HDFC Bank