IndusInd Bank shares rose 5% to Rs 1,130 on the BSE in Friday’s intra-day trade on reports that the Hinduja Group is looking to raise its stake in the private sector lender from 15% to 26% with an investment of Rs 10,000 crore.

IndusInd Bank’s promoter, IndusInd International Holdings Ltd, is said to have received approval from the banking regulator to increase its stake in the bank from 15.16% to 26%, Business Line reported.

Hindujas may deploy Rs 8,000-10,000 crore between June and September to increase their stake in the bank.

The regulator’s approval is in line with the newly launched RBI (Acquisition and Holding of Shares or Voting Rights in Banking Companies) directive in 2023, whose promoters will increase their stake to 26% for the first time in 2023.

The stock was trading at Rs 1,110 on the BSE at 9.40 am, up 3.2% from its previous close. The stock rose for a second straight session, gaining more than 6%.

Meanwhile, IndusInd Bank on January 18 reported a 58% rise in consolidated net profit to Rs 1,963.54 crore for the quarter that ended December 2022, beating market expectations by a mile.

The rise in net profit was partly due to a sharp 37 per cent drop in provisions to Rs 1,064.73 crore in the quarter from Rs 1,654.2 crore a year ago. The decline in provisions reflected a reduction in bad loans by lenders.

A healthy 17% year-on-year growth in net interest income to Rs 12,923 crore in the quarter also drove the bank’s net profit. This was supported by solid loan growth. The bank’s stable net interest margin (NIM) is another earnings booster despite cost pressures on the liability front. IndusInd Bank reported that its NIM expanded by 17 basis points to 4.27%.