RBI Clears ICICI Group to Raise Federal Bank Stake to 9.95%

RBI has cleared ICICI Prudential AMC and ICICI Bank group entities to hold up to 9.95% in Federal Bank, with a 1-year window to reach the threshold.

Why Federal Bank Is In The Spotlight?

Federal Bank has come into focus after market disclosures indicated that ICICI Prudential Asset Management Company (ICICI Prudential AMC), along with ICICI Bank group entities, received regulatory approval to raise their aggregate holding in the private lender up to 9.95%. 

The permission is not an announcement of an immediate purchase, but it expands the headroom for accumulation through market routes and fund schemes. The approval is also time-bound, with the entities required to complete the “major shareholding” within 1 year from the approval letter date, as captured in reports. 

What Is The Issue And Why It Is Trending?

Federal Bank is seeing heightened attention because the ICICI group’s permitted holding ceiling has been raised to 9.95%, which is a closely tracked level in banking shareholding norms. It signals that the group’s investment arms and related entities can scale exposure without breaching the cap, provided they stay within conditions and timelines. 

A key detail is the 1-year validity for reaching the approved level. The development also landed when investors are already tracking Federal Bank’s performance trajectory, especially after recent quarterly numbers were reported in the market.

The Core Story Behind The 9.95% Approval

The central point is straightforward. ICICI Prudential AMC and ICICI Bank group entities have received approval to acquire or hold up to 9.95% (aggregate) in Federal Bank’s paid-up share capital or voting rights. 

Reports also note the approval is time-bound, requiring completion of the stated threshold within 1 year from the regulator’s communication.

Before getting into the broader implications, here is a clean summary of what has been reported.
 

This approval also sits within a broader pattern of similar clearances across multiple banks. Mint reported that the same permission set covered Federal Bank along with other lenders. 

ET Now News also described the development as allowing ICICI Prudential AMC to acquire up to 9.95% in 8 private lenders, keeping Federal Bank within a wider basket of names being tracked simultaneously. 

What Happened Earlier And The Wider Backdrop?

This was not a one-off approval story limited to Federal Bank. ICICI Bank stated that the regulator approved the group’s application to acquire up to 9.95% in 8 lenders, explicitly including Federal Bank. The bank also noted the requirement to complete the threshold within 1 year, as per ETBFSI’s report timestamped Feb 12, 2026.

In parallel, capital market coverage has shown similar approvals for ICICI group entities in other banks. For example, Business Standard reported an approval for ICICI AMC to acquire up to 9.95% in Karur Vysya Bank, reinforcing that such permissions are appearing across multiple lenders, not only Federal Bank. 

Separately, the broader debate on how banks and large institutions fund acquisition-related activity has been active for months. LoansJagat reported on Aug 26, 2025 that SBI had sought a policy change to allow banks to finance acquisitions, showing how funding, ownership and regulatory oversight have remained under discussion well before this Federal Bank update. 

Federal Bank Numbers Investors Are Tracking

Alongside the stake approval news, Business Today highlighted Federal Bank’s latest performance snapshot for the December quarter.
 

These figures are being watched closely because a higher permitted institutional holding can coincide with increased flows, especially when the lender is already reporting growth in profit and core income. 

What Stakeholders Have Put On Record?

As reported by ETBFSI, ICICI Bank communicated that the regulator approved the group’s application for ICICI Prudential AMC and group entities to acquire up to 9.95% in multiple lenders including Federal Bank, subject to completion within 1 year. Market reporting also notes the approval is tied to compliance requirements and shareholding limits.

Conclusion

The approval expands the ICICI group’s allowed holding up to 9.95% in Federal Bank with a 1-year timeline. The next cues will come from disclosures and shareholding pattern changes.