InvestorQ : What is the tiff between RBI & Kotak Bank?
rhea Babu made post

What is the tiff between RBI & Kotak Bank?

Ria Jain answered.
3 years ago
HC rejected the plea of Kotak bank’s plea on stay of RBI directive and so the deadline of 31st Decmeber 2018 to reduce the promoter’s stake in company is same for kotak Bank. The tiff between Kotak and RBI though is a new buzz around, but the story or difference is almost a decade old. Let us know the story of RBI and Kotak since inception of Kotak bank.
  • RBI gave banking license to Kotak with a condition to reduce Promotr’s stake to 49% from 61.5%. K
  • Kotak didn’t reduce the promoter’s stake to 49% till 2010 and RBI grants more time to reduce promoter’s stake and ask for a plan for the same.
  • Later in 2011, Kotak again asks for 3 more years of extension to reduce the promoter’s stake.
  • It was in Jan 2012 when asked Kotak to cut the stake of promoter to 10% till Mar2016
  • To its reply Kotak submit plan to cut the promoter stake plan as
     40% till 31 March,
    2014 30% till 31 March,
    2017 20% till 31 March, 2020

  • In June 2012, RBI rejected this plan and directs Kotak Bank to reduce 20% stake till March 2018 and 10% by 2020.
  • In July 2012, Kotak proposes the following new plan changes as follow
     40% till 31st Mar, 2014
    30% till 31st Dec, 2016
    20% till 31st Mar, 2018

  • In March 2014, Kotak bank asks for extension in deadline to reduce the promoter’s stake to 40% due to General Elections.
  • On May 2014, RBI say NO for extension in deadline
  • On Oct 2015, Kotak Bank has reduced the promoter’s stake to 33.71% and asks more time for further dilution of promoter’s stake.
  • In Jan 2017, RBI directs Kotak bank to act on new dilution plan, which states to reduce
    30% till 30th Jun, 2017
    20% till 31st Dec, 2018
    15% till 31st Mar, 2020
  • To reduce the stake of promoters, in 2018 Kotak bank issues non-convertible preference shares
  • In Aug 2018, RBI directs Kotak bank to not use Preference share for dilution of promoter’s stake.
  • And so, Kotak files against the RBI directives on Dec 2018; to which Court verdict was in favour of RBI.