Kotak Mahindra Bank Moves Court Against RBI Decision On Promoter Shareholding

Bloomberg Quint

Private sector lender Kotak Mahindra Bank Ltd. has moved Bombay High Court after the Reserve Bank of India restricted it from reducing promoter holding using preference shares. In a statement to stock exchanges on Monday, the bank said that it has filed a writ petition to "protect its interests" as a "matter of abundant caution". In August, Uday Kotak proposed to reduce his promoter holding in the bank using preference shares rather than bringing down his share of common equity. Within 10 days of the proposal, the RBI told Kotak that the Perpetual Non Convertible Preference Shares (PNCPS) route to dilute promoter shareholding was not acceptable. In its statement on Monday, the bank said that it had once again explained its position to the RBI but is yet to hear back from the regulator. "We have since clarified and conveyed to the RBI our position in relation to PNCPS being a part of paid up capital and the legal basis on the matter of dilution of shareholding under the Banking Regulation Act. We have also shared with the RBI the opinions of eminent jurists and senior most legal counsels of the country, which confirm our understanding," the bank said.