The Reserve Bank of India (RBI) on February 5, 2024, approved HDFC Bank’s proposal to acquire an “aggregate holding” of up to a 9.5% stake in six Indian Banks, namely Yes Bank, Axis Bank, Bandhan Bank, ICICI Bank, IndusInd Bank, and Suryoday Small Finance Bank.

The proposal was raised by the HDFC Bank Group in December 2023. The approval will be valid till February 4, 2025. This means that if the group fails to acquire a major shareholding in these six banks within a year from the issuance of RBI’s letter, then this approval stands cancelled.

The approval is subject to compliance with the applicable statutes, regulations, and guidelines of the Securities and Exchange Board of India and RBI and provisions of the Foreign Exchange Management Act.

Further, RBI has clarified that the holdings of HDFC Bank and its subsidiaries should not surpass 9.50% of the voting rights or the paid-up share capital of the given banks at any point of time. The subsidiaries of HDFC Bank include HDFC Mutual Fund, HDFC Life Insurance Company Ltd., HDFC Ergo General Insurance Ltd, and others.

After the announcement of the approval, Yes Bank’s shares rose near a 52-week high. On Tuesday, the private sector bank stock gained as much as 13% to Rs 25.70.