RBI Clears SBI Mutual Fund to Raise Stake in Federal Bank Up to 9.99%

Mumbai, January 31, 2026: The Reserve Bank of India (RBI) has granted approval to SBI Mutual Fund to acquire an aggregate holding of up to 9.99% of the paid-up share capital or voting rights in The Federal Bank Ltd, the private sector lender informed stock exchanges on Friday.

Federal Bank said it received the RBI’s intimation on January 30, 2026, allowing the country’s largest mutual fund house to increase its stake, subject to regulatory conditions. The approval enables SBI Mutual Fund to build a meaningful strategic exposure in the Kerala-based bank within the prescribed threshold.

The RBI clearance is conditional upon compliance with provisions of the Banking Regulation Act, 1949, the RBI (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025, and applicable regulations under SEBI and the Foreign Exchange Management Act (FEMA).

Market participants view the approval as a positive signal, reflecting regulatory comfort with Federal Bank’s governance standards and financial position. While the approval does not mandate immediate acquisition, it provides SBI Mutual Fund the flexibility to gradually raise its holding within the permitted limit.

Shares of Federal Bank are expected to remain in focus as institutional interest in the lender continues to strengthen amid improving asset quality trends and stable growth prospects in the private banking space.