Promoter group pares 3.24% stake in Kotak Mahindra Bank

MUMBAI: Kotak Mahindra Bank’s promoter group has sold 3.24% stake in the lender to comply with Reserve Bank of India guidelines on share holding in private banks.

The RBI has asked the bank to reduce promoter holding to 40% by end-September and 20% by March 31, 2018.

On Friday, Kotak Trustee Company, the promoter group entity of Kotak Mahindra Bank, sold 25 million equity shares, worth Rs 2,200 crore.

The shares were bought by Canada Pension Plan Investment Board at Rs 880 per share, according to Paul Parambi, head of group strategy at Kotak Mahindra Bank. The share had closed at Rs 859.95 on Thursday.

“This will enable the bank meet the RBI requirement. The next deadline where the promoter holding has to come down to 30% is by 2016,” Parambi said. “During the 30-month period, we would explore inorganic growth options. However, an inorganic growth option would be pursued only if its shareholder accretive and not just with the objective to dilute promoter holding.”

The cap on promoter’s shareholding in banks has become a contentious issue. As per policy, no promoter should hold more than 10%. However, the PJ Nayak-led committee on governance in banks has proposed that promoters be allowed up to 25% equity stake.

“If the recommendation of the PJ Nayak committee becomes a norm, then we would make a representation to the RBI to permit 25% promoter holding in the bank,” Parambi said.

Banks such as Yes Bank and Development Credit Bank have reduced promoter’s stake but are still outside the mark set by RBI.