Yes Bank and Union Bank of India are set to become part of the Nifty Bank index at the end of December 2025, following changes aligned with the revised weightage framework issued by the Securities and Exchange Board of India (SEBI). The move marks a significant reshuffle within one of India’s most tracked sectoral indices.
Expected Passive Inflows for Newly Added Banks
Their inclusion is projected to attract passive investment flows estimated at nearly $249 million.
- Yes Bank is expected to see inflows of approximately $140 million tied to over 550 million shares.
- Union Bank of India may receive around $109 million for nearly 63 million shares.
These inflows will not occur at once but instead be distributed in four scheduled phases.
Four-Stage Rebalancing Cycle
The rebalancing will unfold across the following dates:
- December 30, 2025
- January 26, 2026
- February 26, 2026
- March 26, 2026
Once the process is complete, Yes Bank is expected to command a 3.9% weight in the index, while Union Bank is likely to hold a 2.6% weight.
Revised SEBI Rules Drive Index Composition Changes
On December 1, the National Stock Exchange (NSE) finalized guidelines reflecting SEBI’s newly introduced weight concentration limits for indices linked to futures and derivatives, including the Nifty Bank. The revised structure aims to prevent excessive dominance by the largest constituents.
- Under the revised framework, the weightage of the top three constituents in the index will now be restricted to a maximum of 19%, 14%, and 10%, respectively.
Impact on Existing Heavyweights
The recalibration will trigger significant rebalancing for major banks:
- HDFC Bank weight share is expected to decline from 27.5% to 18.9%
- ICICI Bank will also see a reduction aligned with the new cap rules
- SBI is expected to gain a slightly higher weight, rising from 9.4% to 10%
Both HDFC Bank and ICICI Bank may face outflows of around $330 million each over the four staggered adjustments.
The updated index weights will officially take effect after market close on December 30, 2025.
Summary
- Yes Bank and Union Bank will join the Nifty Bank index at the end of December 2025.
- Expected passive inflows total ~$249 million, distributed across four tranches.
- Additions follow SEBI’s revised weight concentration norms requiring more balanced index representation.
- Heavyweights such as HDFC Bank and ICICI Bank will see a reduction in weight, while SBI gains marginally.
- The rebalancing changes become effective post-market on December 30, 2025.
Disclaimer:
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