In a significant regulatory development, the Reserve Bank of India (RBI) has given its green light to entities within the HDFC Bank group to collectively acquire a stake of up to 9.5% in IndusInd Bank. The approval, announced by HDFC Bank via an exchange filing on Monday, December 16, 2025, marks a notable shift in the shareholding landscape for the private sector lender.
Details of the Regulatory Approval
The permission specifically applies to the combined holdings of HDFC Bank's group companies, which include HDFC Mutual Fund, HDFC Life Insurance Company, HDFC ERGO General Insurance, HDFC Pension Fund, and HDFC Securities. Crucially, HDFC Bank itself clarified that it does not intend to make any direct investment in IndusInd Bank.
The need for this regulatory nod arose because the aggregate shareholding of these affiliated entities was projected to surpass the earlier ceiling of 5%. In anticipation of this, HDFC Bank formally applied to the central bank on October 24, 2025, seeking permission under the RBI's Commercial Banks (Acquisition and Holding of Shares or Voting Rights) Directions, 2025.
The approval comes with strict conditions. The total stake held by the HDFC group cannot exceed 9.5% of IndusInd Bank's paid-up share capital or voting rights at any point. Furthermore, the clearance is time-bound. It is valid for a period of one year from the date of the RBI's letter, expiring on December 14, 2026. The bank must complete the acquisition within this timeframe, or the approval will lapse automatically.
Existing Holdings and Market Context
Data from the September quarter reveals that HDFC group entities already hold a substantial position. The HDFC Midcap Fund, a scheme under HDFC Mutual Fund, alone owned a 4.03% stake in IndusInd Bank. Based on the closing price on Monday, December 16, this holding was valued at approximately ₹2,668 crore.
Mutual funds collectively are major investors in IndusInd Bank, holding close to 23% of its equity. Other significant shareholders include the Government of Singapore, the Government Pension Fund Global, BNP Paribas, and the Life Insurance Corporation of India (LIC).
Immediate Market Reaction
The stock market reaction to the news on the following trading day, Tuesday, December 17, was muted. Both banking stocks experienced minor declines in early trade. By 10:10 AM on the National Stock Exchange (NSE), HDFC Bank's share price was down 0.10% at ₹995.10, while IndusInd Bank's shares fell 0.73% to ₹845.
This movement continues a period of pressure for IndusInd Bank shares, which have declined over 1% in the past month and nearly 15.45% over the last year. In contrast, HDFC Bank's stock has shown more resilience, gaining about 6.77% in the past year despite recent volatility.
The RBI's approval provides a structured pathway for increased strategic financial investment by one of India's largest banking groups in a fellow private bank, setting the stage for potential future developments in the banking sector's consolidation and investment trends.
