Lawstreet Journal

Uday Kotak Sells 5.6 Crore Shares in Kotak Mahindra Bank in Compliance with RBI’s Shareholding Norms

Lawstreet Journal 3 Jun 2020 8:03pm

Image courtesy: Lawstreet Journal Business Uday Kotak Sells 5.6 Crore Shares in Kotak Mahindra Bank in Compliance with RBI’s Shareholding Norms

On Tuesday, June 2, 2020, Billionaire Promoter and Managing Director of Kotak Mahindra Bank, Uday Kotak, sold 56 million or 5.6 crores of his shares in the said bank to comply with the Reserve Bank of India’s promoter shareholding norms. He sold the shares following a 100 percent secondary placement at Rs. 1,240 per share. 

Kotak Mahindra Bank, on Thursday, 30th January 2020, said that an agreement was made with the regulator to reduce Uday Kotak's shareholding to 26 percent by August 2020, to comply with the promoter shareholding standards. Moreover, it was decided not to buy any further paid-up voting equity shares of the bank before the promoter's shareholding has surpassed 15 percent or the higher percentage permitted by RBI from time to time. 

Kotak Mahindra Bank was expected to reduce the stake of the promoter to 15 percent by March 2020, but the condition has now been relaxed by a gradual reduction in the stakes authorized by RBI. Nevertheless, Uday Kotak's voting privileges were restricted at 15 percent effective 1st April 2020, given the fact that his actual shareholding was higher.

Reserve Bank of India's regulation requires private bank promoters to limit their shareholding in the bank to 40 percent within three years, 20 percent within 10 years, and 15 percent within 15 years of acquiring their license. This disagreement between the bank and its regulator resulted in Kotak dragging RBI to the Bombay High Court, but the case was eventually removed after the settlement was reached in January of this… Continue Reading...

Tagged: Kotak Mahindra Bank  
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