HDFC Bank must limit its group entities’ combined holdings to a maximum of 9.5% in the banks’ share capital or voting rights. Credit: d_odin/Shutterstock.

HDFC Bank Group has secured approval from the Reserve Bank of India (RBI) to increase its aggregate holding in three banking entities.

This clearance from the central bank allows the group to acquire stakes of up to 9.5% in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank.

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The RBI’s approval is valid for one year, expiring on 2 January 2026.

HDFC Bank must ensure that its group entities’ combined holdings do not surpass the 9.5% threshold in the paid-up share capital or voting rights of these banks.

Under the RBI Directions 2023, ‘aggregate holding’ encompasses ownership by the bank, related management or control entities, mutual funds, trustees, and promoter group entities.

Although HDFC Bank itself does not plan to invest directly, the approval was sought to comply with the RBI’s investment limit regulations, as the group’s collective investment was anticipated to exceed the standard 5% limit.

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The application to the RBI was made on behalf of the group by HDFC Bank on 20 September 2024, in accordance with the RBI Directions, which apply to the bank and its group entities.

This move is expected to impact the group’s presence in the banking sector.

In 2022, HDFC Bank announced plans to double its branch network within three to five years by adding 1,500-2,000 branches annually.

The plan involves opening around 1,500-2,000 locations every year.