New Delhi
There is a big stir in the banking sector in the new year. HDFC Bank, the country’s largest private bank, is going to buy up to 9.5% stake in three banks. For this he has got the green signal from RBI. These include Kotak Mahindra Bank, AU Small Finance Bank and Capital Small Finance Bank. AU Small Finance Bank said in an exchange filing today that it has received a letter from the RBI. It said HDFC Bank and other group companies HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Management, HDFC Ergo General Insurance and HDFC Securities have received approval to buy up to 9.50% stake in AU Small Finance.
AU Small Finance Bank is a scheduled commercial bank listed on the BSE 100 index. Its market cap is Rs 42,678.04 crore. The market cap of HDFC Bank is Rs 13,37,919.84 crore. It is the third largest company in the country in terms of market cap after Reliance Industries and TCS. HDFC Bank also said in a filing to the exchange that it has received RBI approval to purchase 9.5 per cent aggregate holding in Kotak Mahindra Bank and Capital Small Finance Bank.
One year validity
The approval given to HDFC Bank to buy this stake in these banks will be valid for one year. Also, HDFC Bank will have to ensure aggregate holding. That is, the holding of HDFC Bank and other group companies in these banks should not exceed 9.5 percent of the paid-up share capital or voting rights of those banks. As per RBI’s 2023 guidelines, the aggregate holding includes shares of the bank, its subsidiaries, mutual funds, trustees and promoter group entities. HDFC Bank does not plan to invest in these banks but the group’s aggregate holding may exceed the 5% limit. Therefore, HDFC Bank had sought approval from RBI to increase the investment limit.
