Uday Kotak sells 5.6 cr shares in Kotak Mahindra Bank, ends standoff with RBI; shares surge over 7% in early trade – Firstpost

Billionaire banker Uday Kotak, who had a protracted run-in with the Reserve Bank over his extra private holding in Kotak Mahindra Bank, will promote 2.eight p.c stake in the lender for no less than Rs 6,800 crore.

The transfer would carry the curtains down on a protracted standoff between the regulator and the financial institution over the difficulty, which noticed Kotak dragging the RBI to the Bombay High Court in December 2018, and the case remains to be pending.

“The stake dilution will be done through a block deal and will be completed shortly at a price band of Rs 1,215 to Rs 1,240 a share,” an individual acquainted with the event instructed PTI.

As per the time period sheet, the deal can be value Rs 6,800 crore on the decrease finish of the value band.

Currently, Kotak and his household holds 28.eight p.c stake in the financial institution as towards the RBI mandate of 26 p.c.

Kotak, the richest banker in Asia, is the Managing Director of Kotak Mahindra Bank, which is the fourth largest personal sector lender in the nation.

RBI nod for trimming promoters’ stake

In February, Kotak Mahindra Bank had stated the RBI had granted its ultimate approval for lowering promoters’ stake in the financial institution to 26 p.c.

On 30 January, the financial institution had knowledgeable about RBI’s in-principle acceptance for lowering promoters’ shareholding to 26 p.c of the paid-up voting fairness share capital (PUVESC) of the financial institution inside six months from the date of ultimate approval of the regulator, PTI had reported.

The RBI had requested the financial institution to chop promoters’ shareholding to 20 p.c of paid-up capital by 31 December, 2018, and 15 p.c by 31 March, 2020.

“Further to our intimation dated 30th January 2020,…the Reserve Bank of India has granted its final approval vide its letter dated 18th February 2020 in the matter relating to dilution of promoters” shareholding in the bank,” Kotak Mahindra Bank stated in a regulatory submitting.

With this, the financial institution can be transferring in direction of withdrawing a case regarding dilution of promoters’ shareholding in the financial institution which it had filed towards the RBI in the Bombay High Court.

“Our board of directors has resolved to abide by the above. The bank is withdrawing writ petition No. 3542 of 2018 filed by it in the High Court of Bombay,” Kotak Mahindra Bank had stated in late January submitting.

In August 2018, Kotak had proposed the issuance of perpetual non-cumulative desire shares (PNCPS) to chop promoter holding to 19.70 p.c, which the RBI rejected.

The financial institution then challenged the RBI’s rivalry in the Bombay High Court.

The RBI’s financial institution licensing guidelines mandate {that a} personal financial institution’s promoter might want to pare holding to 40 p.c inside three years, 20 p.c inside 10 years and to 15 p.c inside 15 years.

In 2003, Kotak Mahindra Group’s monetary arm Kotak Mahindra Finance had obtained banking licence from the RBI, changing into the primary NBFC in India to transform right into a financial institution.

Effective April 2015, one other personal sector lender ING Vysya Bank was merged into Kotak Mahindra Bank.

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