AU Small Finance Bank (AU SFB) has secured approval from the Reserve Bank of India (RBI) for HDFC Bank and its group entities to acquire up to 9.5 per cent of its stake. The approval, granted in early January 2025, allows the acquisition to take place within one year, subject to compliance with regulatory requirements, including the Banking Regulation Act and RBI’s guidelines on shareholding in banking companies.
The approval, granted in a letter dated January 3, 2025, permits HDFC Bank, along with its subsidiaries—HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC ERGO General Insurance, and HDFC Securities to acquire an aggregate holding of up to 9.5 per cent of the paid-up share capital or voting rights of AU SFB. If the acquisition is not completed within the specified timeframe, the approval will stand canceled.
The acquisition is also subject to the provisions of the Foreign Exchange Management Act, 1999, regulations from the Securities and Exchange Board of India (SEBI), and other applicable statutes, regulations, and guidelines.
This development marks a significant move for both banks, expanding HDFC Bank’s footprint in the small finance banking sector while AU SFB benefits from the strategic support of HDFC’s well-established financial entities.