In a strategic move, HDFC Bank, India’s leading private sector lender, has decided to reject a $2 billion offer from Mitsubishi UFJ Financial Group (MUFG) of Japan, which sought to acquire a 20% stake in HDB Financial Services, HDFC Bank's non-banking financial company (NBFC) subsidiary. This proposal would have placed HDB Financial Services at a valuation of $10 billion.

Instead of going forward with the offer from MUFG, HDFC Bank’s board has chosen a different path by opting to list HDB Financial Services on the stock market. This decision aligns with the Reserve Bank of India’s regulatory requirements, and the bank is keen to fulfill these through the public listing.

This development is expected to come as a disappointment to Japanese officials, as the potential deal was anticipated to enhance economic and strategic relations between India and Japan. MUFG’s interest in the NBFC arm of HDFC Bank was seen as part of its broader strategy to bolster its footprint in the Indian market.

Currently, HDFC Bank holds a commanding 95% share in HDB Financial Services, and the upcoming listing is poised to be a critical milestone for the company’s growth trajectory.