Kotak Mahindra Bank gets nod to raise Rs 500 crore by issuing preference shares on private placement basis

New Delhi: Kotak Mahindra Bank will raise up to Rs 500 crore by issuing preference shares on a private placement basis.

The Non-Convertible Preference Shares (NCPS) Issuance Committee of the board of directors of the bank on Wednesday resolved to approved the issue of perpetual non-cumulative preference shares (PNCPS) on a private placement basis aggregating to an issue size of up to Rs 500 crore, Kotak Mahindra Bank said in a regulatory filing.

The PNCPS will offer the allottees a fixed dividend of 8.10 percent.

The funds are to be utilised to boost the capital under Basel III norms which are to be adopted fully by Indian banks by March 2019.

As per the norms, banks are required to shore up their capital adequacy ratios and maintain equity capital at 7 percent of risk-weighted assets.

Being implemented in phases since April 1, 2013, India is expected to fully implement Basel III standards by March 2019, three months later than the globally accepted deadline.

Although banks in India have a higher capital adequacy ratio than the minimum total capital requirement under Basel III, their Tier-I or equity capital needs to be shored up to meet the norm.

The stock of Kotak Mahindra Bank closed 0.39 percent up at Rs 1,314.40 on BSE on Wednesday.