Federal Bank has received regulatory approval from the Reserve Bank of India (RBI) for SBI Mutual Fund to acquire a significant stake in the bank. The approval, communicated on January 30, 2026, allows the mutual fund to acquire an aggregate holding of up to 9.99% of the bank's paid-up share capital or voting rights, subject to stringent regulatory conditions.

Regulatory Approval Framework

The bank disclosed this development through a regulatory filing under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The RBI's approval specifically pertains to SBI Mutual Fund's proposed acquisition of shares in Federal Bank, marking a notable institutional investment in the private sector lender.

Mandatory Compliance Conditions

The RBI's approval comes with mandatory compliance conditions that SBI Mutual Fund must strictly adhere to during the acquisition process. These regulatory requirements ensure that the transaction aligns with banking sector guidelines and investor protection norms.

Key compliance areas include:

• Banking Regulation Act, 1949 provisions
• Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025 dated November 28, 2025
• Foreign Exchange Management Act, 1999 regulations
• Securities and Exchange Board of India guidelines
• Other applicable statutes and regulatory frameworks

Strategic Market Impact

This conditional approval represents a significant development for Federal Bank's shareholding structure, as it opens the door for substantial institutional investment from one of India's leading mutual fund houses. The 9.99% threshold is strategically important as it represents the maximum stake an entity can acquire without triggering additional regulatory requirements under banking regulations.

The transaction, once completed subject to all regulatory conditions, will strengthen Federal Bank's institutional investor base and potentially enhance its market credibility. SBI Mutual Fund's interest in acquiring a stake reflects confidence in the bank's business prospects and growth trajectory, while the conditional nature of the approval ensures proper regulatory oversight.

Federal bank Limited has successfully completed the allotment of equity shares under its Employee Stock Option Schemes, marking another milestone in its employee participation programs. The bank allotted a total of 2,05,701 equity shares on January 26, 2026, following proper regulatory procedures and committee approvals.

Allotment Details

The share allotment was executed under two distinct Employee Stock Option Schemes, with the Nomination, Remuneration, Ethics and Compensation Committee providing the necessary approvals. The allotment occurred after the option grantees completed their payment obligations.

Scheme-wise Breakdown

ESOS 2010 Scheme

Under the ESOS 2010 Scheme, the bank allotted 750 equity shares to option grantees. These shares, with a face value of Rs. 2/- each, were issued following the exercise of stock options by eligible employees.

ESOS 2017 Scheme

The majority of the allotment comprised 2,04,951 equity shares under the ESOS 2017 Scheme. This substantial allocation demonstrates the continued participation of employees in the bank's newer stock option program.

Regulatory Compliance

The bank has formally notified both the National Stock Exchange of India Limited and BSE Limited about the share allotment. Company Secretary Samir P Rajdev signed the regulatory communication, ensuring compliance with stock exchange requirements and maintaining transparency in corporate actions.

The allotment represents the bank's ongoing commitment to employee ownership participation through structured stock option schemes, providing employees with opportunities to benefit from the institution's growth and performance.