The Reserve Bank of India has granted approval to HDFC Bank and its group entities to collectively hold up to 9.95% stake in both ICICI Bank and Kotak Mahindra Bank. According to reports from The Economic Times, the RBI issued this approval through letters dated May 6, 2026, specifically allowing the bank to acquire an 'aggregate holding' of up to 9.95% of the paid-up share capital or voting rights in these private sector lenders. The approval follows an application submitted by HDFC Bank on January 23, 2026, on behalf of various group entities including HDFC Securities, HDFC Pension Fund Management, and HDFC ERGO General Insurance. As disclosed by HDFC Bank Company Secretary Ajay Agarwal via reference number SE/2026-27/31, the application was necessitated by provisions under the Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025. The one-year approval, granted under updated RBI rules on bank shareholdings, allows HDFC Bank's group investments in these rival private sector lenders to rise above the standard 5% threshold but caps total exposure at 9.95%, formalising existing positions and ensuring regulatory compliance.
The regulatory approval encompasses multiple HDFC Group entities beyond the primary bank. As reported by The Economic Times, the approval covers HDFC Mutual Fund, HDFC Life Insurance Company Limited, HDFC ERGO General Insurance Company Limited, HDFC Pension Fund Management Limited, and HDFC Securities Limited. These entities can collectively own up to the specified 9.95% stake in both private sector banks, with the total stake requirement never exceeding this limit at any time. The approval provides the necessary regulatory headroom for these group entities to manage their holdings efficiently while ensuring compliance with sector-wide norms regarding aggregate group holdings. According to the latest disclosure, the approval covers HDFC Bank acting as promoter and sponsor of these group entities, ensuring comprehensive coverage of all relevant subsidiaries. The move allows HDFC Bank's group investments to rise above the standard 5% threshold but maintains the 9.95% aggregate holding cap, formalising existing positions and ensuring regulatory compliance.
According to The Economic Times, the approval is valid for a one-year period from May 6, 2026, until May 5, 2027. The bank must ensure that the 'aggregate holding' in both ICICI Bank and Kotak Mahindra Bank does not exceed 9.95% of the paid-up share capital or voting rights at all times during this period. The 'aggregate holding' refers to the combined ownership of all HDFC Group entities together, not each entity individually. While HDFC Bank maintains that it does not have an immediate intention to initiate new investments in these banks, the move represents a proactive step to align with sector-wide norms regarding aggregate group holdings. As clarified by HDFC Bank, the investments by group entities are conducted in the normal course of business of the respective group entities, with the bank itself not planning to invest directly in either ICICI Bank or Kotak Mahindra Bank.
As reported by The Economic Times, this approval provides the HDFC Group with flexibility to increase or maintain holdings in both private sector banks during the validity period. The approval allows for various investment mechanisms including mutual fund investments, insurance investments, treasury investments, and other market purchases to achieve the 9.95% aggregate holding limit. However, the bank has clarified that all current and future holdings by its group entities are conducted in the normal course of business, supporting the ongoing operational activities of its diverse financial service subsidiaries. This regulatory approval does not constitute an acquisition or takeover of either bank, with HDFC Bank itself not intending to invest in either ICICI Bank or Kotak Mahindra Bank. The move formalises existing positions and ensures regulatory compliance while maintaining the bank's strategic focus on its core operations.
