DCB Bank to seek more time to reduce promoters' stake

DCB Bank is one of few private sector lenders where promoters hold more than 10% share

Private lender DCB Bank plans to approach the Reserve Bank of India (RBI) for more time to pare its promoters’ stake in the bank. DCB Bank’s promoters — Aga Khan Fund for Economic Development and Platinum Jubilee Investments — had  18.46 per cent share at the end of December 2013.

Murali M Natrajan, managing director and CEO of DCB Bank, told Business Standard: “It does not look possible for the bank to be able to reduce promoters’ stake to 10 per cent by March 2014. The current market conditions are not favourable for raising capital. We are in the process of seeking guidance from RBI on this subject. Hopefully, we will get a new road map (to cut promoters’ shareholding in the bank).”

The bank is one of the few private sector lenders where promoters hold more than 10 per cent share. HDFC Bank, Kotak Mahindra Bank, IndusInd Bank and YES Bank are the other private lenders where promoters hold over 10 per cent stake.

Other than HDFC Bank, these private lenders were directed to submit a road map to RBI indicating the time for reducing promoters’ shareholding to 10 per cent, people familiar with the development said. It is learnt that the cap on promoters’ shareholding was not applicable on HDFC Bank, as its promoter, the Housing Development Finance Corporation (HDFC), is a publicly held company.

However, for new private sector banks that are expected to get a banking licence in the current calendar year, promoters will be allowed to keep 15 per cent stake. The move has raised a debate with some bankers claiming the cap on promoters’ shareholding in existing private banks would also be raised to ensure a level-playing field. The central bank was yet to clarify on this subject.

According to Natrajan, DCB Bank has so far not received any communication from RBI in this regard. “We have not received any such direction (on raising the cap on promoters' shareholding to 15 per cent) from the central bank. We will wait for their guidance on this matter.”