Indian conglomerate Hinduja Group is looking to increase its stake in private sector lender IndusInd Bank up to 26%, the Hindu BusinessLine reported, citing unnamed sources aware of the development. 

According to stock exchange records cited by CNBC TV18, Hinduja Group had 16.51% ownership and 15.16% voting shares in IndusInd Bank as of December 2022 through IndusInd International Holdings (IIHL), Mauritius.

IIHL secured in principle and conditional approval from the Reserve Bank of India to increase the stake, reported the Economic Times, citing four people

“To increase stake in the bank, Hinduja Group may need to infuse INR100-INR110bn ($1.2-1.3bn). They may infuse the money by issuing preferential shares,” one of the sources told ET.

Sources said that the promoters are pooling the necessary funds and that the acquisition could complete in a month or two.

“Between June and September, the promoters are expected to increase their shareholding in the bank,” one of the sources was quoted by the Hindu BusinessLine as saying. 

The capital infusion could provide IndusInd Bank with the necessary tools to seize opportunities as it looks to make acquisitions to increase its loan book, the report said. 

In addition, IIHL has reportedly been asked to make its current stock in the bank free of encumbrances as a condition for raising its participation.

The news comes after RBI issued new guidelines to allow bank promoters to increase their shareholding to 26%, which was earlier capped at 15%.