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Kotak Mahindra Bank on Tuesday said that the Reserve Bank of India (RBI) has termed its recent preference share allotment as not per regulations.
In a BSE filing, Kotak Mahindra Bank said, “RBI has today communicated to us that our PNCPS issuance does not meet their promoter holding dilution requirement.
We continue to believe that we have met the requirement and will engage with the RBI in this behalf.” PNCPS stands for non-convertible perpetual non-cumulative preference share.
The private lender had issued preference shares on August 2 to dilute promoter stake.
Uday Kotak, the founder and promoter of the bank, pared down his stake in the bank to 19.70 per cent from about 30 per cent following issuance of preference shares.
Kotak's holding in the bank prior to the preference share issuance was 29.74 per cent.
The NCPS Issuance Committee of the board of directors of the bank on August 2 hadapproved the allotment of 100,00,00,000 Perpetual Non-Cumulative Preference Shares (PNCPS) to eligible investors at the issue price of Rs 5 per PNCPS, aggregating to Rs 500 crore pursuant to the issue.
ET had earlier reported that RBI may question Kotak Mahindra Bank’s decision to use a wholly new instrument to bring down the promoter stake to 19.7 per cent from 30 per cent in line with the central bank’s rules on promoter ownership in private sector banks.
