Rabobank has agreed to reduce its stake in local Indian lender Yes Bank in a bid to gain regulatory approval for its plan to set up banking unit in the country.

"Rabobank, as a part of its overall business plan for India, is obliged under the regulations to reduce its shareholding in Yes Bank pending approval of its application for a full banking licence in India," the company said in a statement.

The company previously had a 16 per cent holding in Yes Bank and has recently sold 37.3 million shares, or 11 per cent, to several domestic and foreign institutional investors, amounting to around $213 million. It kept a 4.9 per cent stake.

The Dutch bank was Yes Bank's largest shareholder before the sale.