HDFC Bank has got the Reserve Bank of India (RBI) approval to hold up to a 9.5% stake in IndusInd Bank through its group entities. It includes IndusInd Bank’s paid-up share capital or voting rights. Here are three key points to note. However, this is not big news. Most banking analysts clarified that this is more of a routine approval as the HDFC Group’s combined stake in the bank has rsen beyond the 5% level.
HDFC group’s stake crossing the 5% threshold
HDFC, through its group entities, already owns stake in IndusInd Bank. However, this may cross the default threshold of 5%. If a bank or its group entities together hold more than 5% of another bank’s shares or voting rights, they need prior approval from the RBI.
HDFC group entities like HDFC Mutual Fund, HDFC Life Insurance Company, HDFC ERGO General Insurance, HDFC Pension Fund Management and HDFC Securities, already own IndusInd Bank in its portfolio. “Since the ‘aggregate holding’ of bank group entities is likely to exceed the prescribed limit of 5%, an application seeking approval of RBI for an increase in investment limits was made,” the company said in its BSE release.
Nitin Aggarwal, Head BFSI- Motilal Oswal explained that, “HDFC Bank getting the RBI approval to increase stake is mainly a regulatory requirement for a financial entity to acquire up to 10% stake in a bank. This stake up to 10% will be held across all the group entities, including AMC, pension fund and life insurance business. It is not that HDFC Bank is buying that much stake in IndusInd Bank. One needs RBI approval to raise stake up to 10%, which is what the group has now got. In the past also, we have seen many other mutual funds securing such approval for a stake which is higher than the freely permissible limit.
HDFC Bank does not plan to invest
The bank also clarified that investments made by its group entities in IndusInd Bank are part of their normal business activities. HDFC Bank itself does not intend to make a direct investment in IndusInd Bank.
RBI approval valid for one year
The RBI approval is valid for one year only, until December 14, 2026 and is subject to strict compliance with the prescribed limit. HDFC Bank will need to monitor the combined shareholding of its group entities to ensure it stays within the approved 9.5% cap at all times.
The lender submitted the application to the RBI on behalf of its group companies on October 24, 2025.