Private sector Kotak Mahindra Bank on Wednesday said the Reserve Bank has granted its final approval for reducing promoters' stake in the bank to 26 percent.
On January 30, the bank had informed about RBI's in-principle acceptance for reducing promoters' shareholding to 26 percent of the paid-up voting equity share capital (PUVESC) of the bank within six months from the date of final approval of the regulator.
The RBI had asked the bank to cut promoters' shareholding to 20 percent of paid-up capital by December 31, 2018, and 15 percent by March 31, 2020.
"Further to our intimation dated 30th January 2020,...the Reserve Bank of India has granted its final approval vide its letter dated 18th February 2020 in the matter relating to dilution of promoters' shareholding in the bank," Kotak Mahindra Bank said in a regulatory filing.
With this, the bank is also moving towards withdrawing a case concerning dilution of promoters' shareholding in the bank which it had filed against the RBI in the Bombay High Court.
"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 High Court of Bombay," Kotak Mahindra Bank had said in late January filing.
As on date, the promoter and promoter group's shareholding in the bank stands at 29.96 percent.
Uday Kotak, also a promoter, is the managing director and CEO of Kotak Mahindra Bank.
In August 2018, it had proposed the issuance of perpetual non-cumulative preference shares (PNCPS) to cut promoter holding to 19.70 percent, which the RBI rejected.
The bank then challenged the RBI's contention in the Bombay High Court.
The RBI's bank licensing rules mandate that a private bank's promoter will need to pare holding to 40 percent within three years, 20 percent within 10 years and to 15 percent within 15 years.
In 2003, Kotak Mahindra Group's financial arm Kotak Mahindra Finance had received banking licence from the RBI, becoming the first NBFC in India to convert into a bank.
Effective April 2015, another private sector lender ING Vysya Bank was merged into Kotak Mahindra Bank.
Shares of Kotak Mahindra Bank traded at Rs 1,709 apiece on the BSE, up 1.06 percent from their previous close.
Source: moneycontrol.com