"Mahindra will, however, continue to be associated with the bank in his current capacity as a non-executive director," the bank said in a filing to the Bombay Stock Exchange.
The board had approved of the ceasing of Mahindra as a promoter following a request from him, it said.
Mahindra and his family members held 3.68 per cent stake in Kotak Mahindra Bank and the holding would now come under public shareholding disclosure, the bank said.
"With Mahindra ceasing to be a promoter of the bank, the promoter shareholding of the bank now stands reduced to less than 49 per cent in compliance with the licence condition stipulated by the RBI," it added.
As of March quarter, the promoters held a 52.39 per cent stake in Kotak Mahindra Bank.