Kotak Mahindra Bank’s preference share issue does not meet norms: RBI

Posted on by KNBT

Kotak Mahindra Bank Ltd recently reduced promoter stake below 20% of its paid-up capital to comply with RBI guidelines. Photo: HT file

Kotak Mahindra Bank Ltd recently reduced promoter stake below 20% of its paid-up capital to comply with RBI guidelines. Photo: HT file

New Delhi: Kotak Mahindra Bank Ltd on Tuesday said that the Reserve Bank of India has informed the company that its preference share allotment did not meet the promoter holding dilution requirement. The bank has said it will engage with the central bank regarding PNCPS.

“This refers to our letter dated 2 August 2018. RBI has today communicated to us that our PNCPS issuance does not meet their promoter holding dilution requirement. We continue to believe that we have met the requirement and will engage with the RBI in this behalf,” the bank said in a communication to stock exchanges.

Kotak Mahindra Bank Ltd recently reduced promoter stake below 20% of its paid-up capital to comply with RBI guidelines. The bank’s promoters previously held 30.03% of the bank’s equity capital of Rs 953.16 crore. Their holding was brought down, not by issuing more equity shares, but by selling non-convertible preference shares worth Rs 500 crore. As a result, the bank’s paid-up capital has expanded to Rs 1,453.16 crore, bringing the holding of the promoter group to 19.7%. Preference shares are considered as part of paid-up capital, and RBI’s guidelines refer to ownership caps as a percentage of paid-up capital.

(With inputs from Reuters)

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