Highlights

• RBI approved Kotak Mahindra Group’s proposed stake acquisition in AU Small Finance Bank.
• Kotak Mahindra Group can acquire up to 9.99% stake in AU Small Finance Bank.
• AU Small Finance Bank shares traded higher following the regulatory approval disclosure.

Shares of AU Small Finance Bank Limited (NSE:AUBANK) gained on May 7 after the lender disclosed that the Reserve Bank of India approved a proposed stake acquisition by Kotak Mahindra Bank Limited  and its group entities.

AU Small Finance Bank stock traded at ₹ 1,032.80 during the session, compared to the previous close of ₹ 1,024 on the NSE. The stock touched an intraday high of ₹ 1,032.50.

Source: TradingView

RBI Approves Up To 9.99% Stake Acquisition

According to the exchange filing, RBI granted approval to Kotak Mahindra Bank Limited, along with its subsidiaries and funds managed by group entities, to acquire aggregate holding of up to 9.99% of the paid-up share capital or voting rights in AU Small Finance Bank.

The approval was communicated through RBI’s letter dated May 6, 2026.

The filing clarified that the approval is subject to compliance with provisions of:

• Banking Regulation Act, 1949
• RBI directions and guidelines
• Foreign Exchange Management Act, 1999
• SEBI regulations
• Other applicable statutes and regulatory frameworks

Market Watches Strategic Shareholding Developments

The disclosure did not specify the timeline or mode of stake acquisition by the Kotak Mahindra Group.

Investors are monitoring whether the proposed holding could lead to future strategic developments between the two banking entities.

Kotak Mahindra Group may acquire the stake through market purchases or other permitted routes, subject to regulatory conditions.

Banking Sector Focus Remains On Ownership Structure

The development comes as banking sector participants continue to monitor ownership patterns, capital raising activity and consolidation trends within India’s financial sector.

AU Small Finance Bank remains one of the listed small finance banks in India, while Kotak Mahindra Bank is among the country’s private sector lenders.

Key Risks

• Regulatory conditions may affect the timing of stake acquisition completion.
• Market volatility could influence future share purchase activity and pricing.
• Banking sector regulatory changes may affect ownership and investment limits.
• Any delay in acquisition execution could impact investor expectations.

Summary

AU Small Finance Bank informed exchanges that RBI approved Kotak Mahindra Group’s proposal to acquire up to 9.99% stake in the lender. The approval remains subject to compliance with banking, foreign exchange and securities regulations. AU Small Finance Bank shares traded higher following the disclosure as investors tracked developments related to ownership structure and possible future strategic implications.

FAQs

Q: Why did AU Small Finance Bank shares rise on May 7?

A: Shares gained after RBI approved Kotak Mahindra Group’s proposed acquisition of up to 9.99% stake in the bank.

Q: How much stake can Kotak Mahindra Group acquire in AU Small Finance Bank?

A: RBI approved aggregate holding of up to 9.99% paid-up share capital or voting rights in the bank.

Q: Is the RBI approval subject to conditions?

A: Yes, the approval requires compliance with RBI guidelines, SEBI regulations and applicable banking and foreign exchange laws.