As the Reserve Bank of India (RBI) deadline ends today for the Kotak Mahindra Bank to reduce promoters' stake, the ball is now in the central bank's court.
On December 17, the Bombay High Court refused to stay the central bank's decision of not allowing promoter stake sale in Kotak Mahindra Bank and said it would hear the case next on January 17, 2019.
A debate on review of the ownership norms has been going on in the wake of home-grown Kotak Mahindra Bank being required to cut the promoters holding to 20 percent by December 31, 2018 and further down to 15 percent by March 2020, from the current 30 percent.
In August, the bank did an issue of PNCP (Perpetual Non Convertible Preference) shares, which brought down the promoters' holding to 19.7 percent.
However, the regulator did not approve of this method of stake dilution, after which the bank has filed an appeal with the Bombay High Court challenging the RBI decision.
Uday Kotak, vice chairman and managing director of Kotak Bank holds 30.03 percent stake in the bank. The PNPCS issue was part of Kotak's plan to pare his holding and meet the 2018 guidelines. Earlier in December, the court refused to grant any interim relief to the bank.
Under the current RBI rules, private sector bank promoters are required to dilute their shareholding to 15 percent within 15 years of starting operations.
(With inputs from PTI)