RBI Approves HDFC Bank Group To Buy Up To 9.5% Stake In IndusInd Bank
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- Last Updated: 18 Dec 2025 at 10:26 PM IST
HDFC Bank has received approval from the Reserve Bank of India (RBI) to acquire up to a 9.5 percent stake in IndusInd Bank through its group entities, the bank said in a stock exchange filing. This permission is valid for one year from 15 December 2025. The move comes as IndusInd Bank works on stabilising its business after recent losses and governance challenges. What does this regulatory clearance mean for both banks and for investors watching the banking sector?
What The RBI Approval Allows And Why It Matters
The RBI approval lets HDFC Bank group entities, including HDFC Mutual Fund, HDFC Life Insurance, HDFC Pension Fund, HDFC ERGO and HDFC Securities, hold up to 9.5 percent of IndusInd Bank’s paid-up share capital or voting rights in aggregate. This is a rise from the earlier regulatory limit of 5 percent that applied to bank shareholding without special clearance.
HDFC Bank itself clarified that it does not intend to invest directly. Rather, the combined holdings across its group firms would be counted as one aggregate stake below the cap. In recent shareholding patterns, HDFC Bank group already held around 4.23 percent of IndusInd Bank at the end of September, indicating some room to increase holdings under the new clearance.
The RBI set a clear timeline. The 9.5 percent stake must be acquired within one year, failing which the approval can be cancelled. This ensures that the investment does not remain an open option indefinitely but is acted upon within a defined period.
With this broadened scope, what comes next in terms of strategic and financial context?
What This Means For IndusInd Bank
The regulatory nod comes as IndusInd Bank is rebuilding after a turbulent period. The bank reported its largest ever quarterly loss in the year ending March 2025, largely due to a $230 million accounting and governance hit that led to the exit of its then CEO and Deputy CEO. The bank’s board faced criticism over oversight and delayed disclosure of risks in its derivative portfolio.
In response, IndusInd Bank has taken steps to strengthen its governance and raise capital. It announced plans to raise up to $3.47 billion and to allow its promoters to nominate two board directors. These steps are part of stabilising operations and rebuilding investor confidence.
IndusInd Bank shares have underperformed this year. At market open on the day the RBI approval was announced, IndusInd Bank stock was down about 12.6 percent year-to-date, while HDFC Bank’s stock showed a modest 11.7 percent gain and outperformed the broader market.
Given this backdrop, what strategic implications might this approval have for the two banks and the wider sector?
Investor Takeaway
First, the approval increases potential institutional interest in IndusInd Bank at a time when governance and capital strength are in focus. A bigger crowd that shares in renowned organisations such as HDFC group companies can be an indication of trust and introduce sanity in ownership.
Second, regulatory transparency on shareholding regulations under the Commercial Banks (Acquisition and Holding of Shares or Voting Rights) Directions, 2025, at the RBI has contributed. According to these regulations, banks must obtain authorisation for aggregate holdings exceeding 5 percent. Getting the green signal within a structured framework reduces uncertainty on cross-shareholding.
Third, it will be essential to monitor how IndusInd Bank copes with the repercussions of the previous episode of loss. Medium-term performance prospects will be formed through capital raising plans, restructuring of the board, and robust risk controls.
Finally, observers will watch any market response. Large institutional buying or block deals following the approval could affect stock liquidity and price trends in both HDFC Bank and IndusInd Bank.
With the RBI approval in place, the key question now is whether HDFC Bank group’s increased stake can help stabilise IndusInd Bank’s journey back to consistent performance and stronger governance, or whether broader sector and execution challenges will continue to shape outcomes.
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