The Reserve Bank of India (RBI) on Friday approved HDFC Bank to acquire an aggregate holding of up to 9.5 per cent in share capital (or voting rights) in Kotak Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank.
According to the statement from HDFC Bank, the RBI approval for the same is valid till January 2, 2026, and the company needs to ensure that the aggregate holding by its group entities in Kotak, AU Small Finance, Capital Small Finance banks do not cross 9.5 per cent of paid-up share capital or voting rights.
“Aggregate holding”, according to RBI rules, includes the shareholding by the bank itself and through entities under the same management or control, mutual funds, trustees, promoter group entities, and so on. For HDFC Bank, it houses entities such as HDFC Mutual Fund, HDFC Life Insurance Company, HDFC ERGO General Insurance Company, HDFC Pension Fund Management, and others.
“Whilst HDFC Bank does not intend to invest in these banks, since the ‘aggregate holding’ of HDFC Bank group entities is likely to exceed the [earlier] prescribed limit of 5 per cent, an application seeking approval of RBI for [an] increase in investment limits was made,” reasoned HDFC Bank as to why it applied for a raise in stakeholding limits to RBI.
Meanwhile, Kotak Mahindra Bank announced the resignation of its chief operating officer, Milind Nagnur, from the bank, effective by the end of day of February 15, 2025. Apart from being the COO, Nagnur was also the chief technology officer (CTO) of Kotak.
Bank loans growth slowed for the fifth straight month
Recent data by the central bank also showed that the loan growth of Indian banks dropped for the fifth straight month in November. This trend could also have continued and be evident once the central bank publishes data for December. The moderation in growth was due to lenders reining in unsecured and personal loans following RBI’s recent crackdown on such lending. Overall, bank credit rose 11.8 per cent in November 2024, but it was much slower than the 16.5 per cent growth in November 2023 (excluding the HDFC merger), according to the RBI data released last week.
For the month, RBI also posted that personal loans grew 12.2 per cent, slower than in November 2023 when they rose by 22.4 per cent. Meanwhile, outstanding credit card debt slid to 18.1 per cent from last year’s 34.2 per cent. These statistics excluded the effect of the 2023 HDFC merger.
