HDFC Financial institution will get RBI nod to hike group stake in 3 banks

MUMBAI: HDFC Financial institution has knowledgeable the inventory exchanges that it has obtained approval from RBI for its group entities to hike investments in Kotak Mahindra Financial institution, AU Small Finance Financial institution, and Capital Small Finance Financial institution as much as 9.5% of their share capital.
RBI, by letters dated Jan 3, granted approval to HDFC Financial institution, because the promoter and sponsor of its group entities, together with HDFC Mutual Fund, HDFC Life Insurance coverage, HDFC ERGO Normal Insurance coverage, and HDFC Pension Fund Administration, amongst others.
HDFC Financial institution clarified that whereas it doesn’t intend to spend money on these banks immediately, the “combination holding” of its group entities is prone to exceed the prescribed 5% restrict. This prompted the financial institution to use to RBI on Sep 20, 2024, to approve rising the funding limits. The investments, the financial institution mentioned, are a part of the common course of enterprise for its group entities.
HDFC Mutual Fund, with property below administration (AUM) of Rs 7.7 lakh crore, and HDFC Life Insurance coverage, managing near Rs 3 lakh crore, have important funding portfolios. HDFC Financial institution holds the most important funding e-book throughout the group, primarily comprising authorities bonds, with its non-SLR e-book amounting to Rs 1.7 lakh crore. HDFC Pension Fund lately crossed Rs 1 lakh crore in AUM.
Traders in banks should search prior approval from RBI earlier than rising their stake past 5% threshold, not like in different listed firms the place disclosures are triggered after crossing particular thresholds. SEBI rules mandate buyers buying over 5% of an organization’s shares or voting rights to reveal their holdings inside two working days. Additional disclosures are required if the stake will increase or decreases by 2% or extra.
The approval, legitimate till Jan 2, 2026, is topic to sure circumstances. HDFC Financial institution should be sure that the “combination holding” of its group entities in these banks doesn’t exceed 9.5% of their paid-up share capital or voting rights at any time. “Combination holding” consists of shareholding by the financial institution, entities below the identical administration or management, and holdings by mutual funds, trustees, and promoter group entities, as outlined by RBI’s 2023 tips on banking share acquisitions.