Have met promoter stake requirement: Kotak Bank

By: |
August 11, 2020 2:00 AM

Shares of KMB ended at Rs 1,360.35 on the BSE on Monday, 1.36% higher than their previous close. 

Shares of KMB ended at Rs 1,360.35 on the BSE on Monday, 1.36% higher than their previous close. (Reuters file image)

Kotak Mahindra Bank (KMB) on Monday said that it had achieved full compliance with the Reserve Bank of India’s (RBI) requirement on promoter shareholding.  Promoter Uday Kotak had been asked in February this year to reduce his stake in the lender to 26% over a six-month period.

“Further to our intimation dated January 30, 2020 and February 19, 2020 in relation to the matter of dilution of promoters’ shareholding in the Bank, please note that the Bank has achieved compliance with the promoter shareholding reduction requirement set out in the Reserve Bank of India’s letters dated January 29, 2020 and February 18, 2020 on August 10, 2020, within the timeline prescribed by the Reserve Bank of lndia,” KMB said in a notification to the  stock exchanges.

Shares of KMB ended at Rs 1,360.35 on the BSE on Monday, 1.36% higher than their previous close.  In the last few months, Kotak has reduced his stake in the bank through a Rs 7,450-crore qualified institutional placement (QIP) and an open-market sale of shares.

After the two transactions, his stake in the bank stood marginally above the prescribed limit at 26.1%. Monday’s announcement marks the close of a once-bitter confrontation between KMB and the central bank on the question of promoter ownership in the private bank.

For nearly a year, the matter was in the courts as KMB contested the RBI’s shooting-down of its issue of perpetual non-convertible preference shares (PNCPS) as a means of reducing promoter stake in the bank.  Eventually, truce was called when the RBI allowed Kotak to hold a 26% stake even as voting rights were capped
at 15%.

Interestingly, in June, the RBI set up an internal working group to review ownership guidelines and corporate structure for private banks.  The working group will take into account key developments over the years which have a bearing on the issue of ownership.

The review would provide an opportunity to harmonise norms applicable to banks set up at different time periods, irrespective of the date of commencement of business, said the central bank.

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