The Reserve Bank of India and Uday Kotak, promoter of Kotak Mahindra Bank, have reached an agreement wherein the promoter will be allowed to own 26% of the equity of the bank. This has paved the way for the dispute raised by the regulator to be amicably settled. RBI had earlier stipulated that Kotak should bring down his holding to 15% as per the licensing guidelines and Kotak had in turn contested the decision in a court of law. The case has been pending for the last 13 years. In view of the agreement, Kotak has now withdrawn the case. According to the agreement, the promoter’s voting rights would be capped at 15% of the capital, irrespective of the level of his ownership. This will make the higher stake less effective in terms of overall governance but economically beneficial.
