In a major development, HDFC Bank Limited has received approval from the Reserve Bank of India (RBI) to acquire an aggregate stake of up to 9.95% in both ICICI Bank and Kotak Mahindra Bank. The development was disclosed through a regulatory filing submitted to the BSE Limited and the National Stock Exchange of India Limited on May 6, 2026. The approval has been granted to HDFC Bank in its capacity as the promoter and sponsor of several group entities, including HDFC Mutual Fund, HDFC Life Insurance Company Limited, HDFC ERGO General Insurance Company Limited, HDFC Pension Fund Management Limited, and HDFC Securities Limited.
What RBI approval means
The RBI approval allows the combined stake held by HDFC Bank’s group entities in ICICI Bank and Kotak Mahindra Bank to rise up to 9.95% of the paid-up equity share capital or voting rights. The approval will remain valid for one year, until May 5, 2027.
HDFC Bank clarified that it does not intend to make any direct investment in either of the two private lenders. However, since the combined shareholding of its subsidiaries and group entities was expected to breach the 5% regulatory threshold, the bank approached the RBI for approval under the Reserve Bank of India (Commercial Banks Acquisition and Holding of Shares or Voting Rights) Directions, 2025.
Bank’s plan
The application was submitted to the RBI on January 23, 2026, on behalf of the group entities. HDFC Bank stated that these investments are part of the regular business activities carried out by its subsidiaries and affiliated entities. The approval is primarily related to regulatory compliance rather than any fresh strategic investment by the bank.
Under the revised norms, holdings across mutual funds, insurance businesses, pension entities, and other financial subsidiaries within the HDFC Group are aggregated while calculating ownership exposure in other banks. Since the combined holdings in ICICI Bank and Kotak Mahindra Bank were expected to exceed the earlier 5% cap, HDFC Bank sought RBI approval on behalf of its group companies.
HDFC Stocks in Focus
Following the development, HDFC Bank and its group entities will be able to increase their investment exposure in two of India’s largest private sector banks. This effectively allows the group to hold up to a 9.95% stake in both lenders, strengthening its presence within the Indian banking sector.
The announcement also lifted investor sentiment, with HDFC Bank shares rising nearly 3% during Thursday’s trading session. The development further highlights the RBI’s growing emphasis on transparency in ownership structures and closer monitoring of interconnected exposure within India’s financial system. Market participants are expected to closely track the move as regulatory oversight over large banking and financial services groups continues to evolve.
