The Reserve Bank of India has approved the subsidiaries of HDFC Bank to acquire up to 9.5% stake in smaller peer IndusInd Bank, according to exchange filings on Tuesday.
The bank’s group entities – HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Fund, and others – have received the approval to acquire an “aggregate holding” of up to 9.5% of the paid-up share capital or voting rights in IndusInd Bank, HDFC Bank said in a statement.
Timeline of the move
The bank had made the application to the RBI on behalf of the group entities on October 24 and received a letter of approval from the regulator on Monday.
The central bank has said if HDFC Bank fails to acquire a major shareholding within a period of one year from the date of the letter, the approval would stand cancelled.
What did the letter say?
The letter also said the applicant should ensure that the ‘aggregate holding’ in the bank does not exceed 9.50% of paid-up share capital or voting rights of the bank at all times. If the “aggregate holding” falls below 5%, a prior approval of the RBI will be required to increase it to 5% or more of the total paid-up share capital or voting rights.
The RBI also conveyed that the applicant would not have any representation on the board of IndusInd Bank.
On Tuesday, shares of IndusInd Bank closed 0.7% lower at Rs 845.00 and those of HDFC Bank closed down 0.2% at Rs 994.20 on the NSE.