Kotak Mahindra Bank on Monday said Life Insurance Corporation (LIC) has received the approval of the Reserve Bank of India (RBI) to increase stake in the bank up to 9.99%. According to norms, any acquisition of shareholding/voting rights of 5% or more of the paid-up capital of the bank or total voting rights of the bank shall be subject to obtaining a prior approval from the RBI.
The approval is valid for a period of one year, the bank said in an exchange filing. “We wish to inform you that Kotak Mahindra Bank Limited has received an intimation from Life Insurance Corporation of India stating that the Reserve Bank of India had granted its approval to LIC for increasing its holding in the bank up to 9.99% of the paid-up equity share capital of bank,” the private sector lender said.
The approval comes following the RBI’s announcement last week after accepting recommendations from a working group. The central bank has allowed promoters to raise up to 26% stake and non-promoters to raise up to 10% stake in private sector banks. LIC currently holds a 4.96% stake in the private lender, and Uday Kotak and his family hold 26% stake, shareholding data from the BSE showed.
“Kotak Bank has a high level of Tier-1 at 22.1% and thus doesn’t require capital in the near term in our view, even as growth trends have picked up. The bank has reported steady trends on the asset quality front and has accelerated growth in both retail secured and unsecured segments,” Nitin Aggarwal, senior group VP, banking analyst, Motilal Oswal Financial Services, told FE.
Kotak Mahindra Bank’s stock jumped more than 4% in the day’s trade on Monday. The stock closed at Rs 2,020.20, up 2.9%, on the BSE. On the NSE, it climbed 2.81% to close at Rs 2,019.60.