RBI Allows Kotak Mahindra Bank to Acquire up to 9.99% Stake in AU SFB and Federal Bank

The Reserve Bank of India (RBI) has approved Kotak Mahindra Bank to acquire up to a 9.99% stake in both AU Small Finance Bank and Federal Bank. The approval lets the Kotak Mahindra Group raise its total holding in these two banks through paid-up share capital or voting rights.

Such an approval is needed because the RBI sets limits on how much one bank or group can hold in another bank, to keep the banking system stable. After the announcement, the share prices of the banks involved saw a positive movement.

Kotak Mahindra Bank was founded by Uday Kotak in 1985. It became the first Non-Banking Financial Company (NBFC) in India to convert into a full commercial bank, in 2003.

For aspirants, this is a useful banking-awareness item showing the RBI's role as the regulator that controls ownership and shareholding in Indian banks.