HDFC Bank has received approval from the Reserve Bank of India (RBI) to acquire a 9.55% stake in AU Small Finance Bank. The development comes after the bank had earlier received approval from the Securities and Exchange Board of India (SEBI) in October 2022. HDFC Bank plans to acquire the stake through the purchase of equity shares from various shareholders, including institutional investors, high net worth individuals, and retail investors. The acquisition is expected to support AU Small Finance Bank’s growth plans and strengthen its capital position.
AU Small Finance Bank’s board of directors had earlier approved the proposal to issue and allot equity shares to HDFC Bank. The deal is subject to certain conditions, including the approval of the AU Small Finance Bank’s shareholders at an extraordinary general meeting (EGM). If the deal is successful, HDFC Bank would become the second-largest shareholder of AU Small Finance Bank, with a significant say in the bank’s decision-making process.