Kotak asked to pare promoter stake to 20% by March 2018

The Reserve Bank of India (RBI) has allowed Kotak Mahindra Bank time till March 2018 to reduce the promoters’ shareholding to 20 per cent.

“RBI has advised the bank that the promoter shareholding, currently at 45.21 per cent, be brought down to 20 per cent by March 31, 2018. RBI has also indicated it will take a view on dilution over the next two years thereafter, from 20 per cent to 10 per cent or such other percentage, depending upon the prescription of promoter holding in the new bank guidelines,” a Kotak Mahindra Group spokesperson said.

Earlier, the banking regulator had asked new private sector banks to cut promoters’ shareholding to 10 per cent. Private banks, where promoters held more than 10 per cent stake, had given road maps to RBI on the time they would take to implement the central bank’s directive.

According to bankers, RBI is likely to allow the promoters to have up to 15 per cent stake to ensure a level playing field with new banks.

The draft guidelines on new bank licences proposed the promoter of a new bank must float a non-operative holding company (NOHC) that would hold 40 per cent of the paid-up capital of the bank for an initial period of five years.

The NOHC will then have to reduce its stake to 20 per cent in 10 years and to 15 per cent in 12 years from the date of licensing. At present, private banks where the promoter stake is more than 10 per cent include Kotak Mahindra Bank, YES Bank, IndusInd Bank and DCB Bank. At the end of March, the promoters’ shareholding in YES Bank, IndusInd Bank and DCB Bank were at 26.13, 19.46 and 19.20 per cent, respectively.

Bankers said the cap on promoters’ shareholding was not likely be applicable to HDFC Bank, India’s second-largest private sector bank. This is because the bank is promoted by Housing Development Finance Corporation (HDFC), a publicly held company. The promoters of HDFC Bank had a 23.15 per cent stake at the end of March.