The Reserve Bank of India (RBI) has given the green light to HDFC Bank Limited’s proposal to acquire an “aggregate holding” of up to 9.5% of the paid-up share capital or voting rights in IndusInd Bank Limited. This regulatory approval, granted on February 5, 2024, is valid for one year, and HDFC Bank is expected to complete the acquisition within this period; failure to do so will result in the cancellation of the approval.
As per the filing made by IndusInd Bank with the Bombay Stock Exchange (BSE), the RBI’s approval is subject to compliance with various regulations, including the Banking Regulations Act, 1949, RBI’s Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023, provisions of the Foreign Exchange Management Act, 1999, and regulations issued by the Securities and Exchange Board of India (SEBI), among others.
The RBI has outlined specific conditions for HDFC Bank in its approval. The “aggregate holding” in IndusInd Bank must not exceed 9.5% of the paid-up share capital or voting rights, and if it falls below 5%, prior approval from the RBI will be required to increase it to 5% or more. Moreover, HDFC Bank must acquire the majority shareholding within one year from February 5, 2024; otherwise, the approval stands canceled.
The shareholding pattern of IndusInd Bank, as of December 2023, indicates that promoters IndusInd International Holdings Ltd and IndusInd Ltd together hold 16.45%, mutual funds hold a combined 15.63%, and insurance companies, including LIC, hold a 7.04% stake. Foreign portfolio investors collectively hold 38.24% as of the December quarter.
This approval comes in the wake of the RBI allowing Life Insurance Corporation of India (LIC) to acquire up to a 9.99% stake in HDFC Bank on January 25. LIC is mandated to acquire this major shareholding within one year from the approval date, ensuring that the aggregate holding does not exceed 9.99% of the paid-up share capital or voting rights of HDFC Bank at all times.
