HDFC Bank will buy 9.5% stake of IndusInd Bank
HDFC Bank, the country’s largest private sector bank, has received a special approval from the Reserve Bank of India (RBI). This approval is related to increasing the stake in IndusInd Bank. Reserve Bank of India, through a letter issued on December 15, has given permission to HDFC Bank to hold aggregate holding of up to 9.50% in IndusInd Bank. This approval will remain valid for the next one year, i.e. till December 14, 2026. The central bank has made it clear that under no circumstances should this stake exceed 9.50% of the paid-up share capital or voting rights of IndusInd Bank.
HDFC Bank will not invest directly
In fact, the combined investment of the bank and its group companies was in a position to exceed the already fixed limit of 5%. According to the rules, the regulator’s permission was mandatory to increase the limit, due to which the bank had applied to the RBI on October 24, 2025. HDFC Bank does not intend to make “Direct Investment” in IndusInd Bank. This approval has been taken mainly for other companies of HDFC group.
Since HDFC Bank is the promoter or sponsor of these companies, the investments made by all of them are considered together. The companies whose investments will be counted under this approval mainly include HDFC Mutual Fund, HDFC Life Insurance Company Limited, HDFC Ergo General Insurance Company Limited, HDFC Pension Fund Management Limited and HDFC Securities Limited. That is, these companies will be able to buy shares of IndusInd Bank as part of their business.
What is the rule of ‘aggregate holding’?
The word ‘aggregate holding’ is most important in this entire matter. Reserve Bank of India According to the Commercial Banks – Acquisition and Holding of Shares or Voting Rights Directions, 2025, the total shareholding of any bank group is considered ‘aggregate’ when the bank’s own shareholding along with the shareholdings of other companies, mutual funds and trustees under its management or control are also included.
The purpose of this rule of RBI is to ensure that no financial institution indirectly creates so much influence in another bank that it creates any imbalance in the banking system. This is the reason why it becomes mandatory to take special permission of RBI as soon as the stake goes above 5%.
What will be the impact on investors?
It is natural for common investors to have a question as to what effect this news will have on their portfolio. The bank has clarified that this investment is a part of their “normal functioning”. To understand in simple words, if you have invested money in HDFC mutual fund or insurance plan, then the company is investing in IndusInd Bank shares to grow your money. Its objective is to give better returns to the customers in future.
At the same time, from the stock market point of view, this can be a positive sign for the existing shareholders of IndusInd Bank. When a large and trusted group like HDFC increases stake in a bank, the confidence in that share in the market becomes stronger. This is not any kind of ‘takeover’ or an attempt to take over the company, but only a safe financial investment made for profit which has now got the approval of RBI.
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