Kotak Mahindra Bank gets Reserve Bank's final approval for trimming promoters' stake to 26%
Private sector Kotak Mahindra Bank on Wednesday said the Reserve Bank has granted its final approval for reducing promoters' stake in the bank to 26 percent
The RBI had asked the bank to cut promoters' shareholding to 20 percent of paid-up capital by 31 December, 2018, and 15 percent by 31 March, 2020
As on date, the promoter and promoter group's shareholding in the bank stands at 29.96 percent
Uday Kotak, also a promoter, is the managing director and CEO of Kotak Mahindra Bank
New Delhi: Private sector Kotak Mahindra Bank on Wednesday said the Reserve Bank has granted its final approval for reducing promoters' stake in the bank to 26 percent.
On 30 January, the bank had informed about RBI's in-principle acceptance for reducing promoters' shareholding to 26 percent of the paid-up voting equity share capital (PUVESC) of the bank within six months from the date of final approval of the regulator.
The RBI had asked the bank to cut promoters' shareholding to 20 percent of paid-up capital by 31 December, 2018, and 15 percent by 31 March, 2020.
Kotak Mahindra Bank gets final nod from RBI on promoters' stake dilution plan pic.twitter.com/2WoeMnf5JA
— CNBC-TV18 (@CNBCTV18Live) February 19, 2020
"Further to our intimation dated 30th January 2020,...the Reserve Bank of India has granted its final approval vide its letter dated 18th February 2020 in the matter
relating to dilution of promoters' shareholding in the bank," Kotak Mahindra Bank said in a regulatory filing.
With this, the bank is also moving towards withdrawing a case concerning dilution of promoters' shareholding in the bank which it had filed against the RBI in the Bombay High Court.
"Our board of directors has resolved to abide by the above. The bank is withdrawing writ petition No. 3542 of 2018 filed by it in the High Court of Bombay," Kotak Mahindra Bank had said in late January filing.
As on date, the promoter and promoter group's shareholding in the bank stands at 29.96 percent.
Uday Kotak, also a promoter, is the managing director and CEO of Kotak Mahindra Bank.
In August 2018, it had proposed the issuance of perpetual non-cumulative preference shares (PNCPS) to cut promoter holding to 19.70 percent, which the RBI rejected.
The bank then challenged the RBI's contention in the Bombay High Court.
The RBI's bank licensing rules mandate that a private bank's promoter will need to pare holding to 40 percent within three years, 20 percent within 10 years and to 15 percent within 15 years.
In 2003, Kotak Mahindra Group's financial arm Kotak Mahindra Finance had received banking licence from the RBI, becoming the first NBFC in India to convert into a bank.
Effective April 2015, another private sector lender ING Vysya Bank was merged into Kotak Mahindra Bank.
Shares of Kotak Mahindra Bank traded at Rs 1,709 apiece on the BSE, up 1.06 percent from their previous close.
Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply
The AIBEA said the move will make it more difficult for public sector banks to lend to weaker and priority sectors at concessional rates of interest
Private banks can now be equal partners in the development of the Indian economy, the Union finance minister added
The RBI governor said: 'We have certain major concerns about cryptocurrencies. We have communicated them to the government. It is under consideration in the government and I do expect and I think sooner or later the government will take a call and if required Parliament also will consider and decide'