HYDERABAD: The Reserve Bank of India (RBI) on Wednesday gave its final approval to Kotak Mahindra Bank’s proposal on stake reduction, besides capping the promoter’s voting rights. As on December 2019, promoters led by Uday Kotak, MD and CEO, hold 29.96 per cent of the share capital.
According to norms, Kotak was mandated to reduce promoter shareholding to 20 per cent by December 2018 and to 15 per cent by March 2020. This rule now stands relaxed.
“Further to our intimation dated January 30, 2020, please note that the Reserve Bank of India (RBI) has granted its final approval vide its letter dated February 18, 2020 in the matter relating to dilution of promoter’s shareholding in the bank,” it said in a disclosure with the bourses.
However, Kotak will have to reduce the paid-up voting equity share capital to 15 per cent from the current 20 per cent. Following the stake reduction, the promoters cannot purchase any further paid-up voting equity shares till the percentage of their shareholding reaches 15 per cent of the bank or such higher percentage as might be permitted by the RBI in future.
In August 2018, the bank had issued perpetual non-convertible preference shares to lower promoter’s shareholding from 30.3 per cent to 19.7 per cent, which the RBI refused. Subsequently, the bank had moved the high court against the RBI in December 2018, but has now withdrawn the petition.
According to the RBI, bank promoters should reduced their shareholding to 40 per cent in the first three years after commencing operations and further down to 20 per cent in 10 years and 15 per cent in 15 years.