The Reserve Bank of India (RBI) has approved Life Insurance Corporation of India (LIC) to acquire up to 9.99% of HDFC Bank's paid-up share capital or voting rights, as reported by CNBC TV18, The Hindu BusinessLine, ET Now, The Economic Times, The Financial Express, and Zee News. This represents a significant increase from LIC's current holding of 4.11% as of August 14, 2026. The approval was granted through an RBI letter dated August 19, 2026, following an application made by LIC. HDFC Bank confirmed the development in an exchange filing published on August 20, 2026, stating that "LIC holds 4.11% of the total share capital of the Bank as of the latest available beneficial position i.e. as on August 14, 2026." The approval gives India's largest insurer scope to increase its holding in the lender by nearly 5.9 percentage points from its current level. As per The Economic Times, the RBI approval is subject to provisions of the Banking Regulation Act, 1949, the RBI's Commercial Banks — Acquisition and Holding of Shares or Voting Rights Directions, 2025, the Foreign Exchange Management Act, 1999, SEBI regulations and other applicable laws and guidelines. However, the approval does not mean that LIC will immediately raise its holding to 9.99%. Any increase in stake will have to be undertaken in accordance with the conditions laid down by the RBI and other applicable regulatory norms.
Shares of LIC were trading positively on Thursday, with the scrip rising 1% to ₹417.40 on the BSE, as reported by Zee News. The PSU stock has touched a 52-week high of ₹468.30 and a 52-week low of ₹361, according to the exchange. Similarly, HDFC Bank stock also traded higher, jumping 1.09% to ₹728 on the exchange, with the banking stock recording a 52-week high of ₹1,020.35 and a 52-week low of ₹715.05. The stock had closed Wednesday's session at ₹720 on the NSE, unchanged from the previous close, but gained momentum following the RBI approval announcement. The stock has lost around 6% in the past month and nearly 21% over six months, reflecting broader market pressures and performance concerns. The gains came amid a broader market rebound, with the Sensex up 499 points (0.65%) at 77,409 and the Nifty up 119 points (0.49%) at 24,197, while market breadth remained positive with 1,961 shares advancing against 721 declines. The stock's recovery suggests investor confidence in the LIC stake increase and the bank's long-term prospects, though sustained performance will continue to depend on factors such as loan and deposit growth, net interest margins and overall earnings momentum in coming quarters.
The stock's decline has been attributed to multiple factors affecting HDFC Bank's recent performance. According to The Hindu, the stock has been under pressure due to below-expectations financial performance in the last quarter, the sudden resignation of its previous part-time chairman, and the lack of clarity on the term extension if it's MD & CEO, Sashidhar Jagdishan, post October 26, 2026. These developments have created uncertainty in the market about the bank's leadership and strategic direction, contributing to the stock's recent weakness and the decision to seek RBI approval for increased institutional investment. Despite these challenges, the stock's recovery in Thursday's session suggests investor confidence in the LIC stake increase and the bank's long-term prospects. The stock had hit a fresh 52-week low of ₹715.10 on Wednesday, with the stock price adjusted to account for the doubled share count following its first-ever 1:1 bonus share issue in August 2025, leaving total portfolio value unchanged.
HDFC Bank reported a 5% increase in standalone net profit to ₹19,060 crore for the April-June quarter of FY27, as reported by The Financial Express, broadly in line with estimates of ₹19,720 crore. However, the country's biggest private sector lender faced some challenges with total income declining to ₹92,184 crore from ₹99,200 crore in the same period last year. The lender's net interest income (NII) rose 7% year-on-year to ₹33,534 crore from ₹31,438 crore, while provisions fell sharply by 78.8% YoY to ₹3,060 crore, although they rose 17.2% sequentially. Net interest margin (NIM) stood at 3.26% on total assets and 3.40% on interest-earning assets during the quarter. Operating profit declined 21.2% YoY to ₹28,168 crore, while asset quality weakened marginally with gross NPA rising to 1.17% from 1.15% and net NPA to 0.41% from 0.38%. Meanwhile, domestic investors have been increasing their exposure to HDFC Bank, with mutual funds raising their stake to 30.62% in the June quarter from 29.54% in March, according to shareholding data. Retail participation has also remained significant, with around 44 lakh small retail shareholders - those with authorised share capital of up to ₹2 lakh - collectively holding a 10.32% stake in HDFC Bank as of the June quarter.
LIC reported strong financial results for Q1 FY27, with a net profit of ₹13,492 crore, marking a 23% year-on-year increase from ₹10,987 crore in the corresponding period last year. The insurer's net premium income increased 7% to ₹1.27 lakh crore, while other income rose sharply to ₹635 crore from ₹130 crore. The company's overall annualised premium equivalent (APE) grew 8.2% to ₹13,692 crore, with group business APE increasing 10.2% to ₹6,160 crore and first premium income rising 22% to ₹9,217 crore. However, value of new business (VNB) jumped 61% year-on-year to ₹3,136 crore, with the VNB margin expanding significantly to 22.9% from 15.4% in the previous year. LIC's solvency ratio improved to 2.42, up from 2.35 in the preceding quarter and 2.17 a year earlier, while the 13th-month persistency ratio stood at 70.4% compared with 70.9% a year earlier.
HDFC Bank is tapping the dollar bond market for the second time in two months, with plans to raise at least $1 billion in overseas debt through bonds, as reported by The Hindu BusinessLine. The Mumbai-based lender plans to raise at least $500 million each through three-year and five-year bonds via its GIFT City branch, with investor calls lined up and final pricing expected to be completed by Friday. "Since this would be the last issue before the end of August, we will not be surprised if the final quantum easily surpasses $1 billion," one banker told The Hindu BusinessLine. If completed, the latest bond sale would take HDFC Bank's total proceeds from such issues to $1.75 billion, making it the most after ICICI Bank. The fundraising comes as banks scramble to close overseas fundraising before a special central bank FX swap window closes, with the swap window closing on August 31, a month before the initial deadline of September end. This additional fundraising initiative, combined with the RBI's approval for LIC's stake increase, demonstrates the bank's proactive approach to strengthening its capital base and institutional investor confidence.
