The promoters of Kotak Mahindra Bank have been asked by Reserve Bank of India to slash their stake to 10 percent from around 45 percent by 2016, according to a CNBC TV18 exclusive report. While the promoters have asked time until 2025 to cut down their stake, the RBI had refused to oblige, the story said.
In the past, the promoters had received exemptions from the central bank on cutting down their stake. But this time, the RBI is likely to insist on its demand as the new draft banking license guidelines require that no single entity holds more than 15 percent stake in a bank.
The promoters told CNBC TV18 that they wanted to lower their stake gradually to 15 percent, but given the fact that the draft guidelines have not been passed into law, current regulations require the promoter's stake to be cut to an even lower 10 percent.
At the time of acquiring the bank license, Kotak Mahindra Bank had promised the RBI it would lower its promoter's stake from 63 percent to below 50 percent in five years. Currently, the promoters hold 45 percent in the bank.
It will be difficult for Kotak Mahindra to stick to the deadline of 2016. Even if the promoters start dumping such huge shares (35 percent), the stock price will go for a toss. The promoters will be constant suppliers of shares in the market and the stock price might go nowhere for sometime to come.
Moreover, these share sales will only give funds to the promoters; the bank also needs capital to grow, which may become more difficult going ahead.
No doubt, getting investors to buy part of the promoter's stake as well as for the bank's equity infusion plans will be easier said than done.
The stock closed 1.2 percent down on Wednesday at Rs 550.