HDFC Bank Group gets RBI nod to buy up to 9.5% in Yes Bank, Axis Bank, 4 others

RBI has approved HDFC Bank Group's proposal to acquire up to 9.50% stake in six banks, including Axis Bank, Bandhan Bank, ICICI Bank, IndusInd Bank, Suryoday Small Finance Bank, and Yes Bank.

Livemint, Written By Jocelyn Fernandes
Updated6 Feb 2024
File image of an IndusInd Bank branch in India
File image of an IndusInd Bank branch in India

The Reserve Bank of India (RBI) on February 5 approved HDFC Bank Group's proposal to acquire "aggregate holding" of up to 9.50 percent in six banks including Axis Bank, Bandhan Bank, ICICI Bank, IndusInd Bank, Suryoday Small Finance Bank,  and Yes Bank.

The approvals were issued following applications made by HDFC Bank (acting as a promoter/sponsor of the Group) to RBI on December 18, 2023. The RBI's approval is valid for one year from the date of the RBI's letter, expiring on February 4, 2025.

HDFC Bank is required to ensure that the "aggregate holding" in the aforementioned banks does not surpass 9.50 percent of the paid-up share capital or voting rights of the respective banks at any given time.

The approvals are for HDFC Bank Limited, including its group entities such as HDFC Mutual Fund, HDFC Life Insurance Company Limited, HDFC ERGO General Insurance Company Limited, and others.

The RBI approval is subject to compliance with 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 (as amended), provisions of the Foreign Exchange Management Act, 1999, regulations by the Securities and Exchange Board of India (SEBI), and other applicable statutes, regulations, and guidelines, the filing noted.

Stock market moves

Despite the RBI's approval of the HDFC Bank Group's plans to acquire aggregate holding of up to 9.50 percent in the IndusInd Bank, shares of IndusInd Bank and HDFC Bank are trading flat in the early morning session.

IndusInd share price today opened upside and went on to touch an intraday high of 1548.90 apiece level on BSE, logging a marginal rise against Monday's close of 1539.25 per share on BSE. However, HDFC Bank's share price is trading red after touching an intraday low of 1438.85 per share on BSE.

On why the market remained non-reactive to this big corporate development, Saurabh Jain, Vice President — Research at SMC Global Securities said, “This non-reaction of the Indian stock market to this institutional buying can be attributed to three major reasons — weakness in the market, IndusInd Bank shares already near record high, and speculative buying ahead of the RBI's nod."

Saurabh Jain of SMC Global Securities maintained that the market was well aware of the institutional buying and speculative buying that had already taken place in both stocks. So, further appreciation in IndusInd Bank shares is limited. The rest of the reason lies with the weak stock market sentiments in which investors avoid shares that are not at a discounted price.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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