Kotak Mahindra Bank has moved the Bombay High Court after the Reserve Bank of India (RBI) rejected its bid to issue preference shares for reducing promoter stake.
The bank has to bring down promoter stake to 20% from 30% by December and to 15% by March 2020. The bank’s MD & CEO, who is also the promoter of the bank, has 30% stake.
Earlier, in August the bank issued perpetual non-convertible preference shares (PNCPS) to reduce the promoter stake to 19.7%.
However, RBI tuned down the plea to reduce promoter stake by issuing PNCPS, holding that it did not meet the promoter holding dilution requirement.
The private sector lender said the bank had clarified and conveyed to the RBI its position in relation to PNCPS being a part of the paid-up capital and the legal basis on the matter of dilution of shareholding under the Banking Regulation Act, 1949.
“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 in a filing with the exchanges.
“However, we have not heard from the RBI on the above matter. Given the milestone of December 31, 2018, the bank has been left with no option but to protect its interest. By way of abundant caution, the bank has filed a writ petition with the Bombay High Court to validate the bank’s position,” the bank added.