High Court Refuses To Lift Deadline For Kotak Mahindra Stake Dilution: TV
RBI order mandated Uday Kotak to lower his holding in the bank to 20 per cent by the end of the year
The Bombay High Court refused to stay the central bank order forcing Kotak Mahindra Bank Chief Executive Uday Kotak to dilute his stake in the company he founded, news channel CNBC TV18 reported today, sending shares of the lender sliding nearly 4 per cent.
The bank last week challenged the Reserve Bank of India's (RBI) decision to not recognise its issuance of preference shares as a means of effectively meeting the objective of the RBI order. RBI order mandated Uday Kotak to lower his holding in the bank to 20 per cent by the end of the year.
Uday Kotak was also ordered by the RBI to further reduce his stake to 15 per cent by March 31, 2020. He directly held a 29.73 per cent stake in the bank as of Sept. 30, according to exchange data.
Kotak Mahindra Bank in August issued perpetual non-convertible preference shares (PNCPS) in a bid to comply with the promoter stake rules of the RBI, but was told by the central bank that this plan did not meet official requirements.
The Bombay High Court ruling means Uday Kotak will now have to bring down his stake before the Dec. 31 deadline, or be barred from opening any new branches for a period of two years.
Earlier this month, local media reported that billionaire global investor Warren Buffett's Berkshire Hathaway Inc was looking to buy a 10 per cent stake in Kotak Mahindra Bank.
The bank had said at the time that it was unaware of any such development. Shares of Kotak Mahindra Bank were down 3.4 per cent at 1,213.50 rupees by 0855 GMT in Mumbai.