Share price of Kotak Mahindra Bank gained more than 2 per cent during the opening hours of trade on Wednesday to hit a new 52-week high of Rs 1,739 after the lender said that the RBI has granted final approval to its plan of diluting promoters shareholdings in the bank.
Share price of Kotak Mahindra Bank gained more than 2 per cent during the opening hours of trade on Wednesday to hit a new 52-week high of Rs 1,739 after the lender said that the Reserve Bank of India (RBI) has granted final approval to its plan of diluting promoters shareholdings in the bank. Kotak Mahindra Bank’s shares later dropped marginally and was trading at Rs 1,711 after opening at a price of Rs 1,739. With the approval, the issue of promoters shareholding is settled between the bank and the RBI, an issue that had been pending since 2018.
In a filing with the market regulator, Kotak Mahindra Bank said, “Further to our intimation dated 30th January 2020, please note that the Reserve Bank of India has granted its final approval vide its letter dated 1st February 2020 in the matter relating to dilution of promoters’ shareholding in the Bank.”
Earlier in January, Kotak Mahindra Bank had informed that the central bank had granted its in-principle approval of the banks offer to cap promoters voting rights in the Bank to 20 per cent of paid-up voting equity share capital (PUVESC) until March 31, 2020. “Promoters’ voting rights in the Bank to be capped to 15 per cent of PUVESC from April 1, 2020, onwards,” the bank had said last month.
Kotak Mahindra Bank was asked by the RBI to cut promoters shareholding to 20% of paid-up capital by December 31, 2018, and to cut it further to 15 per cent by March 31, 2020. This followed a proposal by the bank to cut promoter holding to 19.70%, a proposal that was rejected by the central bank. Kotak Mahindra Bank had challenged the RBI in relation to this matter in the Bombay High Court. RBI’s bank licensing rules ask private banks to pare promoter holdings to 40 per cent within three years, 20 per cent within the ten years, and 15 per cent in 15 years.