Private sector lender Federal Bank has received regulatory clearance for a significant equity infusion, after the Reserve Bank of India approved global private equity firm Blackstone to acquire an up to 9.99% stake in the bank.
In a regulatory filing on Thursday, Federal Bank said Blackstone will invest ₹6,196.51 crore through its affiliate Asia II Topco XIII Pte Ltd via a preferential issue on a private placement basis.
As per an earlier shareholder approval granted in October 2025, the bank plans to issue up to 272.97 million warrants, each convertible into one fully paid-up equity share with a face value of ₹2. The warrants will be issued at a price of ₹227 per share, including a premium of ₹225.
Once fully converted, the investment will make Blackstone the largest shareholder in Federal Bank. The Kerala-headquartered lender does not have a promoter, and its shareholding is entirely held by public shareholders, including institutional and retail investors.
The RBI approval underscores strong foreign investor interest in India’s banking sector, particularly in well-capitalised private lenders with diversified loan books. Over the past few years, the sector has seen multiple marquee overseas investments.
In 2024, Emirates NBD announced a $3 billion investment to acquire a 60% stake in RBL Bank, marking the largest foreign investment in India’s private banking space. Prior to that, Japan’s SMBC acquired a 24% stake in Yes Bank, while Warburg Pincus and Abu Dhabi Investment Authority (ADIA) together invested $877 million in IDFC First Bank.
Blackstone’s move also comes amid reports that the Centre is evaluating a proposal to allow foreign ownership of up to 49% in public sector banks. Currently, foreign investment is capped at 20% in state-run banks, while private sector banks allow foreign shareholding of up to 74%, and the insurance sector permits 100% foreign direct investment.
The proposed investment is expected to further strengthen Federal Bank’s capital base and support its medium-term growth plans, as competition in retail, MSME, and digital banking intensifies across the sector.
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