Kotak Mahindra Bank received approval from the Reserve Bank of India to acquire stakes of up to 9.99% each in AU Small Finance Bank and Federal Bank [1].
This regulatory clearance allows Kotak Mahindra Bank to expand its influence within the Indian financial sector by increasing its holdings in two distinct banking entities. Such moves are often used by larger institutions to diversify their portfolios and strengthen strategic ties across the banking landscape.
The approval arrived via an RBI letter dated May 6, 2026 [2]. The bank made the announcement public on May 7, 2026 [2].
According to regulatory filings, Kotak Mahindra Bank sought the increase in shareholding to comply with RBI regulations regarding the maximum permissible holdings in financial institutions [3]. The approved limit of 9.99% [1] ensures the bank remains within the aggregate holding thresholds set by the central bank.
Market reactions followed the news on Thursday. Shares of AU Small Finance Bank rose 0.99% to reach ₹1,034.60 [1].
The acquisition process involves aggregate holdings in both lenders [3]. This means the bank may reach the 9.99% threshold through various purchase methods or existing holdings, provided they do not exceed the cap set by the regulator [3].
Kotak Mahindra Bank did not provide further details on the specific timeline for the completion of these acquisitions. The bank said the move is part of its broader strategy to align with current regulatory frameworks [3].
“Kotak Mahindra Bank received approval from the Reserve Bank of India to acquire stakes of up to 9.99% each”
This approval signifies the Reserve Bank of India's willingness to permit strategic equity accumulation among private lenders, provided they adhere to strict ownership caps. By securing nearly 10% of AU Small Finance Bank and Federal Bank, Kotak Mahindra Bank positions itself as a significant stakeholder without triggering the more stringent regulatory requirements associated with majority ownership or controlling interests.
