Kotak Mahindra Bank said that the RBI has now accepted to cut the promoters voting rights in the bank to 20% of paid-up voting equity share capital (PUVESC) until March 31, 2020. Thereafter, the promoters will have 15% voting rights. And within six months from the date of final approval of the RBI, the promoters’ shareholding in the bank required to be decresed to 26%, Kotak Mahindra Bank said in a statement.
As on December 31, promoters held 29.96% stake in the bank. The RBI asked the Kotak Mahindra bank to cut promoter shareholding to 20% of paid up capital by December 31, 2018, and 15% by March 31, 2020. In Auguist 2018, the bank had proposed perpetual non-cumulative preference shares (PNCPS) to cut down the promoter holding to 19.70%, which was rejected by the RBI at that time. Later, bank challenged RBI’s contention in the Bombay High Court.
As per the RBI’s bank licensing rules, a private bank’s promoter will be required to pare holding to 40% within three years, 20% within 10 years and to 15% within 15 years. Kotak Mahindra Bank said that it will withdraw its petition filed in Bombay High Court.
Here is the announcement by Kotak Mahindra Bank made to the exchanges today.
“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% of paid-up voting equity share capital (PUVESC) until March 31, 2020;
(b) Promoters’ voting rights in the Bank to be capped to 15% of PUVESC from April 1, 2020 onwards;
(c) Promoters’ shareholding in the Bank to be reduced to 26% of PUVESC of the Bank within six (6) 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% 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% of the PUVESC of the Bank or such higher percentage as may be permitted in the future, and exercise voting rights on such shares.”