Bombay High Court on Monday refused to grant stay on the December 31 deadline for promoter stake dilution in Kotak case.
Kotak Mahindra Bank had dragged the Reserve Bank of India (RBI) to the court after its promoter Uday Kotak was barred from reducing his stake in the bank through a preference share issue.
The central bank had asked the promoter to lower his holding in the company to 20 percent by December, and to 15 percent by March 31, 2020.
The stock fell over 3 percent on the report.
The Rs 500 crore preference shares issue of Kotak Mahindra Bank ran in to trouble after RBI said that the bank doesn’t meet promoter holding dilution requirement.
"RBI has today communicated to us that our perpetual non-cumulative preference shares (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,” Kotak Mahindra Bank had said in a BSE filing.
The ruling means Uday Kotak will be required to bring down his stake before the December 31 deadline, or be barred from opening any new branches for a period of two years, as per a Reuters report.
The next hearing in the case will take place on January 17.