Kotak Mahindra Bank secures RBI nod to raise stake in AU Small Finance Bank

Kotak Mahindra Bank has secured approval from the Reserve Bank of India (RBI) to increase its stake in AU Small Finance Bank. The deal allows the bank and its subsidiaries to hold up to 9.99% of the paid-up share capital or voting rights. This move follows Kotak’s existing investment in the lender through its mutual fund schemes. AU Small Finance Bank stands as India’s largest small finance bank. It was also the first in its category to receive RBI approval for transitioning into a universal bank. The institution has already attracted investments from major domestic players, including HDFC Mutual Fund, Nippon Life India Asset Management, and SBI Life Insurance.

Kotak Flexicap Fund currently holds a 1.60% stake in AU Small Finance Bank as of the March quarter. The latest RBI approval now permits Kotak Mahindra Bank, along with its subsidiaries and schemes, to expand its ownership. The combined stake can reach up to 9.99%, marking a significant step in the bank’s investment strategy.

Other notable investors in AU Small Finance Bank include Invesco, DSP Mutual Fund, and HDFC Life Insurance. The bank’s growing list of backers reflects its expanding influence in India’s financial sector. The RBI’s approval enables Kotak Mahindra Bank to strengthen its position in AU Small Finance Bank. With the potential to hold nearly 10% of the shares, the deal reinforces ties between the two financial institutions. The move also highlights AU Small Finance Bank’s appeal as a key player in the banking industry.