Money & Banking

After ₹2-crore fine on Kotak by RBI, both may seek early hearing in Bombay HC

Surabhi Mumbai | Updated on June 09, 2019 Published on June 09, 2019

Kotak Mahindra Bank   -  Bloomberg

With Kotak Mahindra Bank failing to comply with the Reserve Bank of India’s directions on diluting promoter shareholding norms, all eyes are now on the central bank’s move next.

The two are expected to seek early hearing of the Writ Petition pending before the Bombay High Court.

Promoters’ shareholding

The Court had in April adjourned the hearing of the case to January 2020 due to paucity of time. It had previously refused to grant any interim relief to Kotak Mahindra Bank from the RBI’s deadline to reduce promoter shareholding in the bank to 20 per cent by December 31, 2018, from close to 30 per cent at present. The RBI had, at the time, not imposed any penalty as the matter was with the Court.

Both RBI and Kotak Mahindra Bank have till now not sought early hearing on the case from the Bombay High Court.

The RBI had on June 7 imposed a penalty of ₹2 crore on the private sector lender for non-compliance with its directions to furnish information about details of the shareholding held by its promoters and to submit details of the proposed course of action and plans to comply.

In a regulatory filing to the stock exchanges, Kotak Mahindra Bank has said it is examining the order.

In the past, the RBI has seen to be cracking the whip on banks that do not comply with its norms on promoter stake. Last year, in the case of Bandhan Bank, it had frozen the pay of its Managing Director and CEO Chandra Shekhar Ghosh and had barred it from opening new branches for failure to lower promoter stake.

Since then, Bandhan has announced a merger with GRUH Finance and is understood to be planning more steps to bring its promoter stake to permitted levels.

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Published on June 09, 2019
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