HDFC Bank, India’s largest private sector lender, has received approval from the Reserve Bank of India (RBI) to acquire up to a 9.5% stake in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank. The approval is valid until January 2, 2026. HDFC Bank will acquire the stakes through its group entities, including HDFC Mutual Fund, HDFC Life Insurance, HDFC ERGO General Insurance, and HDFC Pension Fund Management. The investment is part of the regular course of business for HDFC Bank’s group entities, aiming to diversify their portfolios and strengthen strategic partnerships within the banking sector.
This development comes after HDFC Bank’s merger with its parent company, HDFC, in July 2023, which expanded its loan portfolio and increased its loan-to-deposit ratio to 110%. In the quarter ending December 31, 2024, HDFC Bank reported a 4.2% increase in deposits to ₹24.53 trillion, outpacing a 0.9% rise in gross advances to ₹25.43 trillion. The acquisition of stakes in these banks is expected to help HDFC Bank boost its deposits and moderate its loan growth.