Kotak Mahindra Bank has received approval from the Reserve Bank of India (RBI) to acquire an aggregate holding of up to 9.99% in AU Small Finance Bank (AU SFB). The development was disclosed by AU SFB in an exchange filing on May 7, 2026.
The approval covers Kotak Mahindra Bank, its subsidiaries, and schemes or funds managed by the Kotak Mahindra Group. The announcement comes amid continued investor interest in the banking and financial services sector.
AU Small Finance Bank informed stock exchanges that the RBI has approved Kotak Mahindra Bank and entities within the Kotak Mahindra Group to acquire an aggregate holding of up to 9.99% of the paid-up share capital or voting rights in the lender.
The approval includes holdings through subsidiaries, managed funds, and investment schemes associated with the Kotak Group. The move is subject to applicable regulatory conditions and investment limits.
According to the March quarter shareholding data, Kotak Flexicap Fund already holds 1,19,97,824 shares in AU Small Finance Bank, representing a 1.60% stake in the company.
Apart from Kotak-linked entities, other institutional investors in the lender include mutual fund houses such as HDFC Mutual Fund, Nippon Life, Invesco, and DSP Midcap. Insurance companies including SBI Life Insurance and HDFC Life Insurance also hold stakes in the bank.
Shares of AU Small Finance Bank traded largely unchanged following the announcement. The stock was down 0.3% at ₹1,021.30 per share during the trading session.
Meanwhile, shares of Kotak Mahindra Bank were trading marginally higher. The stock was quoted at ₹379.40, up ₹2.80 or 0.74% compared to the previous close of ₹376.60 on the BSE.
Last month, reported a net profit of ₹832 crore for the fourth quarter of FY26, reflecting a 65% increase year-on-year and a 25% rise sequentially.
Net interest income (NII), which measures the difference between interest earned and interest paid, rose 23% year-on-year and 10% quarter-on-quarter to ₹2,582 crore.
The bank’s net interest margin (NIM) expanded to 5.96% in Q4 FY26 from 5.7% in the previous quarter, indicating improvement in lending profitability and operating performance.
The RBI approval allows Kotak Mahindra Group entities to gradually increase their exposure to AU Small Finance Bank up to the approved threshold. Such approvals are typically required when financial institutions seek to acquire substantial shareholding in regulated banking entities.
The development may also reflect continued institutional interest in small finance banks, particularly those showing stable growth in profitability, lending activity, and margins.
Shares of Kotak Mahindra Bank were trading higher during the session on May 7, 2026. The stock was quoted at ₹379.50, up ₹2.90 or 0.77% from its previous closing price of ₹376.60.
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Kotak Mahindra Bank’s RBI approval to acquire up to 9.99% stake in AU Small Finance Bank marks a notable development in the banking sector. While AU SFB shares traded flat following the announcement, the approval highlights ongoing institutional interest in the lender amid improving financial performance and growth in core banking metrics.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all related documents carefully before investing.
Published on: May 7, 2026, 12:05 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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