The Reserve Bank of India (RBI) has granted approval to Kotak Mahindra Bank to acquire an aggregate holding of up to 9.9% of the paid-up share capital or voting rights in City Union Bank (CUB), a century-old private sector lender.
Regulatory Approval Details
City Union Bank informed the stock exchanges on Thursday that it received the communication from the RBI on Wednesday. The approval is subject to compliance with the relevant provisions of the Banking Regulation Act, 1949, the Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025, provisions of the Foreign Exchange Management Act, regulations issued by the Securities and Exchange Board of India (SEBI), and other applicable statutes, regulations and guidelines, the bank added.
Key Conditions Imposed
According to CUB sources, the approval has been granted on the condition that the acquirer will not have a seat on the bank's board. Describing it as an investment opportunity for the respective institutions, sources said RBI approval is required if an institution's shareholding exceeds 5%.
For instance, HDFC Asset Management Company (AMC) and SBI AMC held 9.4% and 7.8%, respectively, in CUB as of December 31, 2025. This indicates that multiple institutional investors hold significant stakes in the bank, and Kotak Mahindra Bank's entry as a major shareholder aligns with this trend.
The development marks a strategic move by Kotak Mahindra Bank to expand its presence in the banking sector through a minority stake in a well-established regional bank. City Union Bank, headquartered in Tamil Nadu, has a strong legacy and a network of branches primarily in South India.
