The Bombay High Court, on Tuesday, adjourned the hearing of the writ petition filed by Kotak Mahindra Bank on the dilution of promoter stake to April 1, and refused to give interim relief to the lender against the Reserve Bank of India’s norms for dilution of promoter shareholding.

Harish Salve, the counsel for Kotak Mahindra Bank, offered that until the matter is finally heard, the voting rights may be capped at 20 per cent as the main issue flagged by the RBI is concentration of control, which is exercised by voting rights. The case was heard by a bench comprising justices AS Oka and MS Sanklecha. The suggestion was, however, not accepted by the bench, which pointed out that the matter is not as simple as that.

Salve also pointed out that it is difficult to sell the quantum of shares as directed by the RBI, and that the central bank cannot force the bank’s promoters to sell their shares. The matter was then adjourned to April 1 due to lack of time. This is the second time that the Bombay High Court has refused to give interim protection to the lender against the RBI’s norms for lowering promoter shareholding to 20 per cent from the current 30 per cent. The deadline lapsed on December 31, 2018.

Kotak Mahindra Bank had filed the writ petition on December 10 last year with the Bombay High Court on the Banking Regulation Act, and had sought validation on whether its issuance of Perpetual Non-Convertible Preference Shares (PNCPS) in August 2018 met the regulatory requirements. The RBI had said the issuance of PNCPS by the lender in August last year did not meet its requirements.

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