Kotak Mahindra Bank says complied with RBI promoter stake norms

Kotak Mahindra Bank Ltd on Monday said that it has complied with Reserve Bank of India’s (RBI) guidelines on promoter shareholding, within the prescribed timeline.

“Further to our intimation dated 30 January 2020 and 19 February 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 29 January 2020 and 18 February 2020 on 10 August 2020, within the timeline prescribed by RBI,” the bank said in a statement to the stock exchanges.

For the quarter ended 30 June, promoter Uday Kotak’s stake in the bank stood at 25.82% and the total promoter shareholding was at 26.07%, showed data from BSE.

Earlier in June, Kotak sold 56 million shares held by him in the bank for over ₹6,900 crore through a block deal, in an effort to reduce his stake in the bank to 26.1%, close to the promoter holding level allowed by RBI.

As part of the agreement with RBI in January, Kotak was told to cut his stake in the bank by 4% till August, against the 15% reduction the regulator wanted earlier. However, RBI capped his voting rights—first at 20% till 31 March, which then dropped overnight to 15% even though his actual shareholding remains higher.

The Kotak-RBI disagreement over what constituted reduction in promoter holding saw the bank move the Bombay high court with a writ petition. Following the reprieve in January, the bank said it would withdraw the writ petition filed after RBI struck down its proposal to issue perpetual non-convertible preference shares to comply with promoter shareholding norms.

On 2 August 2019, Kotak Mahindra Bank had completed an issue of non-convertible perpetual non-cumulative preference shares (PNCPS) to bring down the promoter’s holding to 19.7%. However, the bank informed the stock exchanges on 14 August 2019 that the method did not meet the RBI requirements.

At an industry event last month, Kotak, also the chief executive and managing director of the bank, called for greater parity in supervision, regulation and governance between government owned banks with their privately owned peers in India.

“My first principle is that policies, supervision and regulation and governance have to be ownership-neutral and the principles of governance should apply to both public sector banks and to private banks in the same measure,” Kotak had said.