Nearly a year after making a formal application to the Reserve Bank of India (RBI) for hiking stake in IndusInd Bank, the Hinduja Group is expected to get a go-ahead from the banking regulator. According to sources aware of the matter, the approvals to increase stake in the bank is likely to come through by end of this fiscal. IndusInd International Holdings Ltd, promoted by Ashok Hinduja, and its affiliate entity collectively hold around 16.5 per cent stake in IndusInd Bank. This can be increased to 26 per cent once the approval comes through formally.

E-mail sent to the Hinduja Group remained unanswered till press time.

The move would mark a very significant development in the banking landscape as IndusInd Bank would be the first instance where its promoters could increase their stake to 26 per cent, post the 2021 RBI’s Internal Working Group recommendations. Apart from Kotak Mahindra Bank, IndusInd Bank would also be the second instance in the private banking sector with promoter holding at 26 per cent. Increasing stake to such a threshold would enable promoters with voting right majority in the entity.

If the promoters decide to increase their stake in IndusInd Bank in the near term to reflect the higher shareholding, it could lead to $1.2–1.3 billion or approximately ₹11,000 crore of fund infusion into the bank. To put things in perspective, IndusInd Bank is currently among the most-valued entities in Hinduja Group’s financial services companies and in October last year, the group had indicated that it is eyeing an overall valuation of $35–40 billion in the India’s financial services landscape. IndusInd International Holdings also emerged as the successful bidders for Reliance Capital, which houses life and general insurance businesses, though the deal closure is still in the works.

Stake hike round the corner
Hindujas expected to get a go ahead from RBI to increase stake in IndusInd Bank by March 2024
This could lead to $1.2 billion or ₹11,000 crore of fund infusion into the bank
It would also be the first instance of promoters increasing their stake to 26 per cent, post RBI’s IWG recommendation in 2021
At 26 per cent stake, promoters would get voting right majority in the entity