Kotak Mahindra informed the Reserve Bank of India on Thursday about the issuance of 100 crore preference shares, said Jaimin Bhatt, president and group CFO of the company.
“This transaction has just closed last night and to that extent, we have intimated to the RBI just after the transaction happened. Technically it is not an approval,” said Bhatt.
It has issued 100 crore Non-Convertible Perpetual Non-Cumulative Preference Shares with a face value of Rs 5 each with a dividend rate of 8.1 percent to raise Rs 500 crore. This will increase its paid-up (Tier 1) capital. The bank has reported that this will bring down Uday Kotak’s stake to 20 percent as required by the Reserve Bank of India’s (RBI) license rules.
“The requirement for us was to make it as part of paid-up capital to bring down promoter holding,” Bhatt said.
“Every preference share has a coupon and to that extent if I look at the coupon on this which we have got in is in line with what is currently in the market place and to that extent, if the bank makes profit, it is only then that the preference shareholder will get the dividend so also will the equity shareholder at that point of time,” he further mentioned.