HDFC Bank Secures RBI Approval to Acquire Stakes in Peer Banks
HDFC Bank, India’s largest private sector lender, has received the Reserve Bank of India’s (RBI) approval to acquire up to a 9.5% stake in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank. This strategic move is facilitated through its group entities, including HDFC Mutual Fund, HDFC Life Insurance, HDFC ERGO General Insurance, and HDFC Pension Fund Management.
Approval Validity: The RBI’s approval is valid until January 2, 2026.
Aggregate Holding Limit: HDFC Bank must ensure that the combined stake of its group entities does not exceed 9.5% in each of the target banks.
Purpose of Investment: These investments are part of the regular course of business for HDFC Bank’s group entities, aiming to diversify their portfolios and strengthen strategic partnerships within the banking sector.
This development comes after HDFC Bank’s merger with its parent company, HDFC, in July 2023, which significantly expanded its loan portfolio. Post-merger, the bank’s loan-to-deposit ratio increased to around 110%, prompting a focus on boosting deposits or moderating loan growth. In the quarter ending December 31, 2024, HDFC Bank reported a 4.2% increase in deposits to ₹24.53 trillion, outpacing a 0.9% rise in gross advances to ₹25.43 trillion.
| Key Point | Details |
|---|---|
| Why in News | RBI approved HDFC Bank to acquire up to a 9.5% stake in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank. Approval is valid until January 2, 2026. |
| Target Banks | Kotak Mahindra Bank, AU Small Finance Bank, Capital Small Finance Bank |
| Approval Validity | Till January 2, 2026 |
| Acquiring Entity | HDFC Bank through group entities (HDFC Mutual Fund, HDFC Life Insurance, HDFC ERGO, HDFC Pension Fund) |
| Merger Context | HDFC Bank merged with parent HDFC in July 2023, expanding loan portfolios and increasing loan-to-deposit ratio to 110%. |
| Current Data | As of December 31, 2024, HDFC Bank’s deposits grew to ₹24.53 trillion, while advances rose to ₹25.43 trillion. |
| Static Info – Kotak Bank | CEO: Ashok Vaswani Headquarters: Mumbai, Maharashtra |
| Static Info – AU SFB | Headquarters: Jaipur, Rajasthan |
| Static Info – Capital SFB | Headquarters: Jalandhar, Punjab |
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