According to RBI rules, the bank was mandated to reduce promoter shareholding
to 20 per cent by December 31, 2018, and to 15 per cent by March 2020. This rule has been relaxed.
Promoters led by Managing Director and CEO Uday Kotak
owned 29.96 per cent of the share capital as of December 2019.
However, the promoters’ voting rights will stand curtailed. The banking regulator said the promoters would have 20 per cent of the paid-up voting equity share capital until March 31, 2020, and it would be brought down to 15 per cent from April 1, 2020.
The central bank said that after the stake reduction, the promoters would not purchase any further paid-up voting equity shares of the bank till the percentage of their shareholding reached 15 per cent of the bank or such higher percentage as might be permitted by the RBI in future.
The RBI further said the promoters would be entitled to purchase additional shares of the bank’s equity capital up to 15 per cent or such higher percentage as might be permitted in the future, and exercise voting rights on such shares.
The private sector lender had informed the stock exchanges that it had withdrawn the writ petition filed in the Bombay High Court against the regulator on January 30.
In December 2018, the bank had moved a petition in the high court against the RBI after the central bank did not accept the reduction of promoter shareholding through an issue of preference shares.
In August 2018, the lender had issued perpetual non-convertible preference shares, which it said would trim promoter shareholding from 30.3 per cent to 19.7 per cent, but the regulator did not agree with this method. The bank had sought interim protection from the RBI directive and proposed capping of voting rights of the promoters.
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.
Shares of the private lender were up 1.39 per cent at Rs 1,714.50 on the BSE
post the regulator's nod in Wednesday morning trades.
Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd