Kotak Mahindra Bank Gets RBI Nod To Acquire Up To 9.99% Stake In AU Small Finance Bank

AU Small Finance Bank (AU SFB) told stock exchanges on Thursday, 7 May, that the RBI has given Kotak Mahindra Bank the green light to buy a stake in the lender. The nod extends to Kotak Mahindra Bank's subsidiaries and the funds and schemes they manage, all of which together are referred to as the Kotak Mahindra Group.

AU Small Finance Bank shares were trading 2.24% higher at ₹1,029 on the National Stock Exchange as of 10:54 am.

The RBI's letter, dated 6 May 2026, permits the Kotak Mahindra Group to build up a combined holding of as much as 9.99% of AU SFB's paid-up share capital or voting rights.

The nod comes with conditions that the group will need to stay compliant with the Banking Regulation Act of 1949, RBI guidelines, FEMA provisions, SEBI regulations, and any other laws that apply.

What Kotak Already Holds

According to AU SFB's March quarter shareholding data, Kotak Flexicap Fund already holds roughly 1.19 crore shares, which works out to a 1.60% stake.

The lender also has several other big institutional names among its shareholders, including HDFC MF, Nippon Life, Invesco, and DSP Midcap. On the insurance side, both SBI Life Insurance and HDFC Life Insurance hold positions in the bank.

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AU SFB's Recent Financial Performance

AU SFB has had a good run on the financials. For the March quarter of FY26, the bank posted a net profit of ₹832 crore, which is 65% higher than the same period last year and 25% better than the previous quarter. Net interest income came in at ₹2,582 crore, up 23% year-on-year and 10% quarter-on-quarter.

Margins have been moving in the right direction too. Net interest margin widened by 24 basis points to 5.96% in Q4 FY26, compared to 5.7% in Q3 FY26. Taken together, the numbers paint a picture of a bank that is growing at a healthy clip while keeping its profitability on track.

Sources:

Mint

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