HDFC Bank gets RBI Nod to buy into IndusInd Bank

The Reserve Bank of India (RBI) has granted approval to the HDFC Bank Group to acquire stakes of up to 9.50 percent in various banks, including IndusInd Bank, Yes Bank, Axis Bank, ICICI Bank, Suryoday Small Finance Bank, and Bandhan Bank. The approval extends to HDFC Asset Management Company (AMC), HDFC Ergo, and HDFC Life Insurance for their investments, as stated in an exchange filing by the bank.

This approval has a validity period of one year, and in the event that HDFC Bank does not acquire the specified shareholding within this timeframe, the approval will be considered null and void. The RBI’s approval is contingent upon compliance with the relevant provisions of 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 Bank does not surpass 9.50 percent of the paid-up share capital or voting rights of IndusInd at any given time. If the “aggregate holding” falls below 5 percent, prior approval from the RBI will be required to increase it to 5 percent or more of the paid-up share capital or voting rights of IndusInd Bank and Yes Bank.

Analyzing the shareholding pattern, it is observed that the promoters of IndusInd Bank, IndusInd International Holdings Ltd, and IndusInd Ltd together hold a 16.45 percent stake in the bank. Mutual funds hold a combined 15.63 percent stake, while insurance companies, including LIC, hold a 7.04 percent stake. Foreign portfolio investors collectively hold a 38.24 percent stake as of the December 2023 quarter.

In the case of Yes Bank, the entire stake is held by the public, with LIC holding a 4.34 percent stake, and the SBI-led consortium (including Axis Bank, HDFC Bank, ICICI Bank, Kotak Bank) holding a 37.23 percent stake.

Furthermore, HDFC AMC holds a 3.43 percent stake in ICICI Bank and a 2.57 percent stake in Axis Bank.

FAQ’s

What banks has the RBI allowed HDFC Bank Group to acquire stakes in?

The RBI has granted approval to HDFC Bank Group to acquire stakes in IndusInd Bank, Yes Bank, Axis Bank, ICICI Bank, Suryoday Small Finance Bank, and Bandhan Bank.

What does the recent approval from the Reserve Bank of India (RBI) allow HDFC Bank Group to do?

The approval grants HDFC Bank Group permission to acquire stakes of up to 9.50 percent in various banks, including IndusInd Bank, Yes Bank, Axis Bank, ICICI Bank, Suryoday Small Finance Bank, and Bandhan Bank.

Is there a timeframe associated with this approval?

Yes, the approval has a validity period of one year. If HDFC Bank does not acquire the specified shareholding within this timeframe, the approval will be considered null and void.

What regulations must HDFC Bank comply with regarding this approval?

HDFC Bank must adhere to the relevant provisions of 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.

What limitations are imposed on HDFC Bank’s holding in IndusInd Bank?

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

What requirements apply if HDFC Bank’s “aggregate holding” falls below 5 percent in IndusInd Bank?

If the “aggregate holding” falls below 5 percent, HDFC Bank will require prior approval from the RBI to increase it to 5 percent or more of the paid-up share capital or voting rights of IndusInd Bank and Yes Bank.

What is the current shareholding pattern of IndusInd Bank?

As of the December 2023 quarter, the promoters of IndusInd Bank hold a 16.45 percent stake, mutual funds hold a combined 15.63 percent stake, and insurance companies, including LIC, hold a 7.04 percent stake. Foreign portfolio investors collectively hold a 38.24 percent stake.

Who holds stakes in Yes Bank?

The entire stake in Yes Bank is held by the public, with LIC holding a 4.34 percent stake, and the SBI-led consortium (including Axis Bank, HDFC Bank, ICICI Bank, Kotak Bank) holding a 37.23 percent stake.

What stakes does HDFC Asset Management Company (AMC) hold in ICICI Bank and Axis Bank?

HDFC AMC holds a 3.43 percent stake in ICICI Bank and a 2.57 percent stake in Axis Bank.

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