As per the central bank's rules, the bank must reduce its promoter shareholding to 20% by December 31, 2018 and 15% by March 31, 2020.
Kotak Mahindra Bank on Monday filed a writ petition in the Bombay High Court against the Reserve Bank of India’s (RBI) decision to overrule the issue of perpetual non-convertible preference shares (PNCPS) as a valid means of reducing promoter Uday Kotak’s shareholding in the bank.
Following the bank’s communication to the stock exchanges, its shares fell as much as 7.3% intraday before ending down 6.6% than their previous close at Rs 1,198.15.
On August 2, the bank had announced completion of the PNCPS issue, resulting in dilution of its promoter stake to 19.7% of paid-up capital. As per the central bank’s rules, the bank must reduce its promoter shareholding to 20% by December 31, 2018 and 15% by March 31, 2020.
The RBI took exception with the PNCPS route for stake dilution and on August 14, the bank had communicated the same to the exchanges. “We continue to believe that we have met the requirement and will engage with the RBI in this behalf,” it said.
On Monday, the bank said it has since clarified and conveyed to the RBI its position in relation to PNCPS being a part of paid-up capital and the legal basis on the matter of dilution of shareholding under the Banking Regulation Act. It has also shared with the central bank the opinions of eminent jurists and senior legal counsels of the country, which confirm its understanding of the rules.
“However, we have not heard from the RBI on the above matter. Given the milestone of December 31, 2018, the bank has been left with no option but to protect its interest. By way of abundant caution, the bank today filed a writ petition with the Hon’ble Bombay High Court to validate the bank’s position,” the private bank said on Monday.