The Bombay High Court on Tuesday deferred the Kotak Mahindra vs Reserve Bank of India (RBI) matter on reducing promoter stake to April 1.
After senior counsel Harish Salve, representing Kotak Mahindra Bank, said that the private lender is ready to issue an undertaking to limit its promoter voting rights to 20 per cent until May 2020 as concentration of power by the promoter is the main issue for the banking regulator, the court said the matter is not as simple as the petitioner is making it out to be, and posted the matter for further hearing to April 1.
The bank had sought interim protection from the RBI directive and proposed capping of voting rights of the promoters. The bench was presided over by Justice AS Oka and M S Sanklecha.
In the last hearing RBI’s counsel Venkatesh Dhonde had asked for more time to reply to the writ petition filed by the private lender against the regulator.
In December 2018, Kotak Mahindra Bank had moved a writ petition in the Bombay High Court against the RBI after the central bank did not accept the reduction of promoter shareholding through an issue of preference shares.
At that time, the court had denied any relief to the private lender against the deadline set by the RBI to bring down its promoter shareholding to 20 per cent by December 31, 2018.
The Reserve Bank of India had mandated the bank to reduce its promoter shareholding to 20 per cent by December 31, 2018 and to 15 per cent by March 2022. In August, the lender had issued perpetual non-convertible preference shares, which it said would trim promoters’ shareholding from 30.3 per cent to 19.7 per cent but the regulator did not agree with this method.
According to RBI norms, a bank needs to bring down its promoter shareholding to 40 per cent in the first three years after starting operations. Thereafter, the bank needs to bring down its promoter shareholding to 20 per cent in 10 years and 15 per cent in 15 years.
The shares of Kotak Mahindra Bank closed at Rs 1262.60, up 1.10 per cent on the BSE.
Disclosure: Entities controlled by the Kotak family have a significant shareholding in Business Standard