Synopsis: The Reserve Bank of India (RBI) has granted approval to Zulia Investments, a subsidiary of Singapore's Temasek Holdings, to increase its stake in AU Small Finance Bank up to 7%. This move could position Zulia as the largest foreign portfolio investor in the bank.
On February 13, 2025, AU Small Finance Bank announced that it had received approval from the Reserve Bank of India (RBI) for Zulia Investments Pte. Ltd., an indirect wholly-owned subsidiary of Temasek Holdings, to raise its stake in the bank to up to 7%.
As of December 2024, Zulia Investments held a 1.37% stake in the bank.
The approval is contingent upon the acquisition being completed by February 12, 2026, and requires compliance with various regulations, including the Banking Regulation Act of 1949, RBI guidelines, the Foreign Exchange Management Act of 1999, and applicable SEBI regulations.
This development underscores Temasek's confidence in AU Small Finance Bank's growth trajectory and reflects the increasing foreign interest in India's banking sector.
If Zulia Investments proceeds with the stake increase, it could become the largest foreign portfolio investor in the bank.
Despite this significant development, shares of AU Small Finance Bank remained flat on Thursday, indicating a neutral market reaction to the news.
Conclusion
The RBI's approval for Zulia Investments to augment its stake in AU Small Finance Bank highlights the growing foreign investment interest in India's financial institutions.
This move not only strengthens Temasek's presence in the Indian banking sector but also signals confidence in the bank's future prospects.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
