KOCHI: Once the pride of Indian entrepreneurship, the country’s private sector banks — built painstakingly on the vision of Indian promoters and nurtured by domestic investors — are witnessing a quiet but unmistakable shift in ownership.
The Indian hand that once steered these institutions is gradually giving way to global funds, foreign institutions, and overseas strategic investors. The latest in the series of foreign institutiins buying into an Indian private bank was the Blackstone deal with Kerala’s Federal Bank.
In October 2025, Blackstone announced an investment of Rs 6,196.51 crore (approximately $705 million) in Federal Bank, acquiring a 9.99 per cent stake through a preferential issue. This investment positions Blackstone as the largest shareholder in the Kerala-based private lender.
A quick scan across the sector reveals a stark pattern. Apart from Kotak Mahindra Bank, where founder Uday Kotak and his family still hold around 25.9 per cent, and the public sector banks where the government remains the majority shareholder, no major Indian private bank today has a single Indian entity owning more than 10 per cent.
This change didn’t happen overnight. It began subtly – through the entry of foreign institutional investors seeking exposure to India’s financial growth story. Over time, however, their stakes deepened, often with the blessing of special regulatory approvals.
For instance, Canada’s Fairfax Group holds about 40 per cent in CSB Bank, while Japan’s Sumitomo Mitsui Banking Corporation (SMBC) owns a significant 24 per cent in Yes Bank.
Large private banks
Even in banks that were once considered bastions of Indian enterprise, foreign shareholding has grown sharply. HDFC Bank, now merged with HDFC Ltd, has foreign institutional investors holding over 48 per cent.
ICICI Bank too has over 45 per cent foreign holding, while Axis Bank’s foreign ownership exceeds 40 per cent. IndusInd Bank, promoted by the Hinduja Group, has close to 34 per cent foreign shareholding.
The trend is telling – Indian promoters are slowly fading from the ownership map of Indian banking. Many of these institutions were once led, promoted, or founded by Indian business families or domestic entities; now, they are effectively controlled by a dispersed mix of global funds and institutional investors.
This transition raises deeper questions about control, accountability, and long-term strategy. Banks, unlike most corporates, sit at the heart of a nation’s financial stability. Who owns them – and by extension, who influences their policies – matters far beyond the trading floor. While India’s regulatory framework ensures local governance and Reserve Bank oversight, the dilution of Indian ownership signals a structural shift in the country’s financial landscape.
Foreign ownership limit
The RBI’s regulations, in fact, allow foreign ownership of up to 74 per cent in private sector banks – a policy that has enabled this gradual transformation. What began as a push to attract capital and professional management has now turned into a deeper reconfiguration of ownership patterns.
The next frontier, some analysts warn, could be individual or strategic foreign investors gaining influential stakes – moving beyond portfolio investments into active shareholding. The case of SMBC in Yes Bank may not remain isolated for long.
As India’s private banks continue to expand their global aspirations, the question grows sharper: will the Indian banking story still be driven by Indian hands? Or are we witnessing the slow but certain globalisation – and perhaps, foreignisation – of India’s private banking space?
