IndusInd Bank shares in focus as HDFC Bank gets RBI nod to buy up to 9.5% stake

Shares of IndusInd Bank Ltd and HDFC Bank Ltd will be in focus on Tuesday morning after the Reserve Bank of India approved a proposal by HDFC Bank to buy up to 9.5 per cent take in the former bank. In a filing to stock exchanges, the Hinduja group-promoted IndusInd Bank said the apex bank has accorded its approval to applicant HDFC Bank for acquiring an aggregate holding of up to 9.50 per cent of the paid-up share capital or voting rights in IndusInd Bank Limited. The aforesaid RBI approval, IndusInd Bank said, has been granted with reference to the application made by the applicant to the RBI.

"The aforesaid approval granted by the RBI is subject to compliance with the relevant provisions of the Banking Regulation Act, 1949, RBI’s Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023 (as amended from time to time), provisions of the Foreign Exchange Management Act, 1999, regulations issued by Securities and Exchange Board of India, and any other statutes, regulations and guidelines, as applicable," it said.

The RBI, while granting the approval has also conveyed that if the applicant fails to acquire major shareholding within a period of one year from the date of the aforesaid RBI letter, the approval shall stand cancelled.

"Further, the applicant shall ensure that the aggregate holding in the bank does not exceed 9.50 per cent of the paid-up share capital or voting rights of the bank, at all times. If the aggregate holding falls below 5 per cent, prior approval of

the RBI will be required to increase it to 5 per cent or more of the paid-up share capital or voting rights of the bank," it said.

IndusInd Bank recently reported strong loan growth, stable net interest margin and sustained traction in fee income. "With retail deposit mix at sub-optimal levels (45 per cent) and elevated LDR at 89 per cent, we believe that IndusInd Bank faces structural liability-side challenges to sustain its pace of growth. Incremental

buffers and elevated opex are likely to drag medium-term return ratios," it suggested.

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