There were rumours in the air that the Reserve Bank of India allowed HDFC Bank to buy a stake in Industry Bank, Yes Bank, and the other 5 banks, but in reality, the Reserve Bank of India allowed HDFC Group, more specifically HDFC Bank’s Asset Management Company, to buy a stake in these banks.
In a recent statement, HDFC Bank clarified that RBI allowed them to buy stakes in Axis Bank, Bandhan Bank, ICICI Bank, IndusInd Bank, Suryoday Small Finance Bank, and Yes Bank, but in reality, RBI allowed HDFC Bank Group to buy stakes in these banks, not only HDFC Bank.
On the other hand, IndusInd Bank informed stock exchanges on Monday evening that the RBI allowed the HDFC Bank Group to acquire a 9.50% stake. Later on, exchanges released circulars to let people know about the news.
As per the RBI Banking Regulation Act 1949, RBI approval is mandatory to buy stakes in banks if the stake is going to provide voting rights in the bank, and SEBI regulations should also be followed for the same.
Currently, more than 41% of the stake is held by foreign investors in the industry bank, followed by retail investors, who hold around 18% of the stake, and promoters, who have around 16% of the stake.
After the news came out, the banking sector showed a negative impact. Bank Nifty was down more than 0.7% in the morning; banks like IndusInd Bank were down more than 2%; and HDFC Bank was down by 0.7%.
However, HDFC Life Insurance Company, which comes under the HDFC Bank Group, showed a positive impact on the news and was up by more than 5% in a single day. Overall, the banking sector was down, but by the end of market hours, it had recovered a lot.