RBI allows Temasek unit to raise stake in AU Small Finance Bank, shares rise

Industry:    1 week ago

The Reserve Bank of India has given its approval to a Temasek unit to raise its stake in AU Small Finance Bank, the lender said on Thursday. This may make Zulia the largest foreign portfolio investor in the lender.

RBI has granted approval to Zulia Investments Pte. Ltd., an indirect wholly owned subsidiary of Singapore-based state investment firm Temasek Holdings, to increase its stake in AU Small Finance Bank (AU SFB) up to 7%, AU Small Finance Bank said in an exchange filing on Thursday.

AU SFB stated that it had received a copy of the RBI’s letter dated February 12, 2025, addressed to Zulia Investments. The letter grants the entity, along with its persons acting in concert and associate enterprises, permission to acquire an aggregate holding of up to 7% of the bank’s paid-up share capital or voting rights within one year from the date of approval. If the stake acquisition is not completed by February 12, 2026, the RBI approval will stand cancelled.

As per exchange data, Zulia Investments held a 1.37% stake in AU Small Finance Bank as of December 2024.

However, the bank did not disclose any financial details of the deal.

Shares of AU Small Finance Bank eroded initial losses and were trading 0.3% higher at Rs 556.25 apiece on BSE as of 10:30 am. BSE Sensex was up 350 points or about 0.5%.

This move positions Zulia Investments as a major overseas shareholder and could potentially make it the largest foreign portfolio investor in AU SFB.

The RBI’s approval signals continued foreign interest in India’s banking sector. The potential increase in Temasek’s stake also underscores its confidence in AU SFB’s growth trajectory and long-term prospects.

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