News

Published: February 6, 2024
Updated: February 6, 2024

RBI Greenlights HDFC Bank Group's Strategic Move of acquiring 9.5% stake in IndusInd Bank

RBI Approval Secured: HDFC Bank Group's Strategic Acquisition

In a significant development, the Reserve Bank of India (RBI) has granted approval to HDFC Bank Group for its proposed acquisition of up to 9.50 percent "aggregate holding" in the paid-up share capital or voting rights of IndusInd Bank. This pivotal decision follows HDFC Bank's application to the central bank, marking a strategic move in the banking landscape.

Clarification by HDFC Bank: Stake Acquisition for HDFC Group

To provide clarity on the matter, HDFC Bank specified to CNBC-TV18 that the stake acquisition in IndusInd Bank is not solely intended for HDFC Bank but for the entire HDFC Group. Acting as the promoter, HDFC Bank sought approval from the RBI for investments by its Asset Management Company (AMC) and Insurance arms.

Stringent Regulatory Compliance: Conditions for Approval

The RBI approval comes with stringent conditions, necessitating compliance with various regulatory frameworks, including the Banking Regulation Act, 1949, RBI's Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies, provisions of the Foreign Exchange Management Act, 1999, SEBI regulations, and other applicable statutes and guidelines.

Timely Action Required: One-Year Window for Major Shareholding

HDFC Bank Group must ensure timely action, as failure to acquire a major shareholding within one year from the date of the RBI letter could result in the cancellation of approval. Additionally, the group must maintain its "aggregate holding" in IndusInd Bank below 9.50 percent of the paid-up share capital or voting rights at all times.

IndusInd Bank's Resilient Performance: Q3FY24 Results

Amidst these strategic developments, IndusInd Bank released its financial results for the October-December quarter of fiscal year 2023-24 (Q3FY24). The bank reported a notable 17.3 percent increase in standalone net profit, reaching ₹2,297.8 crore compared to ₹1,959.2 crore in the previous year.

Positive Outlook and Growth Strategy

Sumant Kathpalia, Managing Director & CEO of IndusInd Bank, expressed optimism regarding the Indian economy's robust momentum and the bank's strategic growth trajectory. With a focus on delivering growth, granularity, and governance, IndusInd Bank remains committed to navigating the evolving financial landscape.

A Strategic Step Forward

As HDFC Bank Group secures RBI approval for its strategic move in IndusInd Bank, the banking sector witnesses a significant development. With adherence to regulatory compliance and a focus on strategic growth, both HDFC Bank Group and IndusInd Bank are poised to navigate the dynamic financial landscape with resilience and agility.