Relief Rally: HDFC Bank, HDB Financial Jump After RBI Drops Rule On Business Overlap Curbs

HDFC Bank and HDB Financial Services saw a relief rally on Wednesday after the Reserve Bank of India (RBI) confirmed that the final version of its prudential regulations will not restrict business overlaps between banks and their group entities, which was a key concern for HDB Financial investors since its IPO.

Relief Rally After Policy Clarity

Shares of HDB Financial Services rose 2.2%, rebounding from intraday lows after RBI Governor Sanjay Malhotra clarified that new prudential rules will not prohibit overlap of business activities between banks and group companies. The stock logged its best single-day gain since its market debut on July 2.

Parent HDFC Bank also advanced 1.4%, extending the financial sector’s rally following the policy announcement.

Governor Malhotra said the RBI has finalized its draft circular on forms of business and prudential regulations, first issued last October, and will issue the final guidelines soon. The central bank has decided to drop the proposed restriction on overlapping business between banks and related entities, leaving it instead to the discretion of bank boards.

HDB Financial Sees Relief After Overhang Lifted

The now-removed restriction had been cited as a key regulatory risk in HDB Financial’s Red Herring Prospectus before its IPO. 

The company had warned that potential RBI directions prohibiting certain products from being offered by both HDB Financial and its promoter group entities, such as HDFC Bank, HDFC Sales, and HDFC Securities, could hurt its operations and financial results.

The clarification eased that concern, sparking renewed buying interest. HDB’s stock had slipped below its IPO price of ₹740 earlier this week, after touching a post-listing high of ₹891 in July.

RBI Policy

The RBI’s October policy maintained a status quo on repo rate at 5.50% with a neutral stance. The rate action was in line with market expectations, but the surprise rollback of the proposed overlap restriction on the HDFC Group gave a sentiment boost to both HDB Financial and HDFC Bank.

What Is The Retail Mood?

On Stocktwits, retail sentiment for both HDFC Bank and HDB Financial Services was ‘bearish’, with message volume described as ‘normal’ for the former and ‘high’ for the latter.

HDFC Bank’s stock has risen 8.2% so far in 2025, while HDB Financial Services’ stock declined 8.9% over the same period.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on