Nod For Bank Props Kmfl 20%
Shares of Kotak Mahindra Finance hit the 20 per cent upper deck after the Reserve Bank of India (RBI) granted the company 'in-principle' approval to convert itself into a commercial bank. Just as trading commenced, the scrip of the non-banking finance company Kotak Mahindra Finance (KMFL) hit the 20 per cent upper deck. At 10:14 am, the scrip was locked at Rs 76.80. Around 21,080 KMFL shares changed hands on BSE.
In the case of Kotak Mahindra, the RBI said the panel's recommendation has been accepted with the change that the applicant should convert itself into a bank rather than set up a bank and also continue as an NBFC.
The approval would be valid for one year during which the applicant should mobilise the required capital and fulfil other conditions outlined in RBI guidelines for new banks in the private sector.
KMFL was originally promoted in 1985 by Uday S Kotak and Sidney A Pinto along with Kotak & Company under the name Kotak Capital Management Finance. The promoters were joined by Harish Mahindra and Anand Mahindra of Mahindra & Mahindra in 1986 and the company was renamed Kotak Mahindra Finance.
The company has established itself as one of India's leading financial institutions. Its activities include corporate finance, capital market financing, asset reconstruction, commercial vehicle finance, consumer finance, technology finance, car finance, investment banking, mutual fund and life insurance.
It also has international partnerships with Goldman Sachs (one of the world's largest investment banks and brokerage firms), Ford Credit one of the world's largest dedicated automobile financiers) and Old Mutual (a large insurance, banking and asset management conglomerate) through joint ventures and subsidiary companies.
The company came out with a public issue in 1993 at a premium of Rs 140 aggregating Rs 4.41 crore. This was followed by a bonus issue in a ratio of 1:1 in 1995. Further, during 2000, the company came out with a rights issue of 91,82,500 equity shares of Rs 10 each at a premium of Rs 90 per share aggregating Rs 91.82 crore.
In 2001, the company received the approval for merger of Pannier Trading Company Pvt (PTCPL) subsequently 17,00,000 shares held by PTCPL in the company were cancelled and in terms of the scheme, 1,50,00,250 shares were allotted to the holders of shares in the erstwhile PTCPL. The issued share capital of the company stood increased from Rs 45.91 crore to Rs 59.21 crore as on March 2001.
The company has got the approval from Irda to enter the life insurance business and sell insurance products. For this, the company has forged a Rs 150-crore joint venture with Old Mutual Plc, a UK based Financial Services group.
The company has approved the amalgamation of Kotak Mahindra Investments Ltd., a wholly owned subsidiary of the company, with Hamko Financial Services Ltd, another wholly owned subsidiary of the company.