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In an unprecedented development, private sector lender Kotak Mahindra Bank has taken the Reserve Bank of India to court over dilution of promoter stakeholding.
In a regulatory filing on Monday, the lender said it has filed a writ petition with the Bombay High Court as it has not heard from the RBI on whether the issuance of Perpetual Non-Convertible Preference Shares (PNCPS) meets the requirements of lowering the promoter stakeholding.
The move comes just days before the December 31 deadline set by the RBI expires.
“By way of abundant caution, the bank has today filed a writ petition with the Bombay High Court to validate the bank’s position,” it said, adding that it had issued PNCPS in August to dilute the promoter’s stake.
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The lender had, on August 2 this year, announced completion of its PNCPS issue, which, in effect, lowered the promoter stake to 19.70 per cent of paid-up capital. The RBI had, however, said that it does not meet its requirements, the bank said, adding that it had then conveyed to the regulator that PNCPS forms a part of the paid-up capital and the legal basis of the matter under the Banking Regulation Act.
“We have also shared with the RBI the opinions of eminent jurists and senior-most legal counsels of the country, which confirm our understanding,” it further said, adding that it has not heard from the RBI on the issue.
“Given the milestone of December 31, the bank has been left with no option but to protect its interest,” it said.
Industry sources said the move is almost unprecedented, and no lenders has taken such an action in the past.
Another source said the RBI had already conveyed its decision and did not see the need to reaffirm it. “The matter is now subjudice. It is now for the court to decide,” he added.
As on September 30, the promoter group held 30.02 per cent stake in Kotak Mahindra Bank, of which, Uday Kotak, Managing Director and CEO of the lender, held 29.73 per cent stake.
The RBI wants the lender to lower the promoter holding to less than 20 per cent from the current 30 per cent by the end of this month. It has to be further reduced it to 15 per cent by March 2020.
Kotak Mahindra Bank shares fell 6.56 per cent on the BSE, closing at ₹1,198.15 apiece.
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