Kotak Mahindra Bank said on Wednesday that it has received Reserve Bank of India's (RBI) final approval for the dilution of promoters' shareholding in the bank. "Further to our intimation dated 30 January, 2020, please note that the Reserve Bank of India has granted its final approval vide its letter dated 18 February, 2020 in the matter relating to dilution of promoters' shareholding in the Bank," Kotak Mahindra Bank said in a notice to stock exchange.
Promoter Uday Kotak will sell 4 per cent of his stake over the next six months, as mentioned in a report in Livemint. The sale of his stake worth Rs 12,500 crore will end the dispute between the regulator and the bank over dilution of promoters' stake. This marks the end of 13-month old dispute after RBI had asked bank's MD and executive chairman Uday Kotak to pare his stake to 15% as part licensing guidelines.
This approval comes after the bank, on January 30, said that the RBI has given its nod to the bank's proposal to reduce promoter stake to 26 per cent from the current 29.96 per cent over the next six months. It had also said that the promoter voting rights would be capped at 20 per cent of the paid-up voting share capital till March 31, as mentioned in the report. The bank had further said that the voting rights would be further capped at 15 per cent effective April 1.
The bank had also stated that the promoters would not purchase paid-up voting equity shares of the bank till promoter shareholding reaches 15 per cent, as mentioned in the report.
Following the RBI's nod, Kotak Mahindra Bank's share price hit an all-time high on Wednesday. Share price of Kotak Mahindra Bank rose up to 2.89 per cent to Rs 1,739.95 compared to the previous close of Rs 1,691.05 on BSE. Kotak Mahindra Bank stock has gained 33.83 per cent in the last one year and gained 1.54 per cent since the beginning of this year.