HDFC Bank’s Historic 1:1 Bonus Share Issue and Capital Expansion Receives RBI Nod

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HDFC Bank, India’s largest private sector lender, has taken a monumental step in its corporate journey with the announcement of its first-ever bonus share issue, alongside a significant increase in its authorized share capital. On August 13, 2025, the Reserve Bank of India (RBI) officially approved the utilization of the Bank’s Share Premium Account for the allotment of bonus shares and sanctioned amendments to its Memorandum of Association to enable the planned capital increase, subject to compliance and shareholder approval.

Introduction

This landmark corporate action comes as HDFC Bank seeks to reward its loyal investors and further strengthen its financial foundations. With the aim of boosting share liquidity and making its stock more accessible, the bank has proposed a bonus issue in a 1:1 ratio—granting shareholders one new fully paid-up equity share for every existing share held. The record date to determine eligibility for this bonus is set for August 27, 2025.

Key Highlights of the Announcement

RBI has approved HDFC Bank’s proposal to use its Share Premium Account for the bonus share issuance and for amendments to the Memorandum of Association related to capital expansion, conditional on full compliance with applicable laws and stakeholder approval. The RBI’s confirmation arrived via official letter dated August 13, 2025.
The Bank will issue bonus shares in a 1:1 ratio, meaning every shareholder will receive one additional share for every share held as of the record date.
The authorized share capital will be increased from Rs 1,190.61 crore to Rs 2,000.00 crore to accommodate the bonus issue and future growth needs.
The process for shareholder approval is underway through a postal ballot, with remote e-voting open from July 23 to August 21, 2025.
All bonus shares will be allotted in dematerialized form, with physical shareowners required to complete dematerialization by August 25, 2025. Unclaimed bonus shares will be held in a demat escrow account until required documentation is received.
Adjustments to stock options, restricted stock units, and American Depository Shares (ADSs) will be made in line with the bonus issuance, ensuring parity for all equity-linked stakeholder instruments.

Shareholder Impact and Corporate Rationale

This bonus issue is poised to double the shareholding of eligible investors without diluting their overall stake, thereby reflecting the bank’s robust profits and market confidence. For example, if a shareholder owns 100 shares, they will receive an additional 100 shares post-issue, and the price per share will adjust accordingly, leaving the investment value unchanged but increasing liquidity.

The increase in authorized capital not only facilitates the bonus issue but also arms HDFC Bank for future business expansion and capital needs—crucial for sustaining its aggressive growth trajectory and for supporting ongoing strategic initiatives.

Approval Process and Next Steps

The proposals for bonus shares and capital expansion now await member approval via postal ballot. Stakeholders can cast their votes during the remote e-voting period, which concludes at 5:00 PM (IST) on August 21, 2025. Once shareholding approval is achieved, the bonus shares will be credited to demat accounts within two trading days from the record date.

Why This Move Matters

This marks HDFC Bank’s first-ever bonus issue since its establishment in 1994, highlighting the bank’s rising profitability and commitment to shareholder value. Market participants have greeted the announcement with optimism, viewing it as a means to attract broader investment and enhance stock market liquidity.

Conclusion

HDFC Bank’s historic bonus share issue and capital augmentation promise to reshape its shareholder base, reward long-term investors, and support future capital requirements, pending member approval over the next week. This is a pivotal moment for both the bank and its investors, signaling confidence and growth as India’s banking sector evolves.

Source: HDFC Bank official postal ballot notice, Times of India, Moneycontrol.