Mumbai: Private lender Kotak Mahindra Bank on Thursday said that it would be withdrawing a writ petition filed a year ago in the Bombay High Court against the Reserve Bank of India (RBI) direction on dilution of promoter shareholding in the bank.
In a stock exchange filing, Kotak Bank said the RBI has given an in-principle acceptance for reducing the promoter shareholding to 26 per cent of the paid-up voting equity share capital (PUVESC) of the bank within six months from the date of the final approval. This brings to end a year long battle over a decade-old issue between the two on promoter shareholding in the bank.
“With respect to our proposal vide our letters dated August 19, 2019 and January 10, 2020 relating to dilution of promoters shareholding in the bank, RBI vide its letter dated January 29, 2020 has conveyed its in-principle acceptance for the following: (a) Promoters voting rights in the bank to be capped to 20 per cent of paid-up voting equity share capital until March 31,2020; (b) Promoters’ voting rights in the bank to be capped to 15 per cent of PUVESC from April 1, 2020 onwards.”
“(c) Promoters’ shareholding in the bank to be reduced to 26 per cent of PUVESC of the bank within six months from the date of final approval of the RBI; (d) Thereafter, the promoters will not purchase any further paid-up voting equity shares’ of the bank till the percentage of promoters’ shareholding reaches 15 per cent of PUVESC of the bank or such higher percentage as may be permitted by RBI from time to time; (e) The promoters will be entitled to purchase paid-up voting equity shares of the bank up to 15 per cent of the PUVESC of the bank or such higher percentage as may be permitted in the future, and exercise voting rights on such shares. Our board of directors has resolved to abide by the above. The bank is withdrawing writ petition No. 3542 of 2018 filed by it in the Hon’ble High Court of Bombay,” said the lender.
As on date, the shareholding of promoter Uday Kotak, who is also the MD & CEO of Kotak Bank, and the promoter group, istands at 29.96 per cent.
The RBI’s bank licencing norms require private banks to ensure the promoter group’s holding does not exceed 40 per cent in the first three years of bank operations, 20 per cent in 10 years, and 15 per cent in 15 years.
In August 2018, Uday Kotak had pared his stake to 19.70 per cent from about 30 per cent by issuing preference shares instead of bringing down his share of common equity. Within 10 days of the proposal, the RBI said the stake dilution using the perpetual non-convertible preference shares (PNCPS) route was not acceptable as it does not meet its regulatory norms. The Bank in December 2018 filed a writ petition to “protect its interests” as a “matter of abundant caution”.