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Kotak Bank told to bring down promoter’s holding

img_0052The RBI has directed Uday Kotak, promoter of Kotak Mahindra Bank to pare promoter holding in the bank to 40% by September. The promoter holding in the bank is 43.58% with Uday Kotak directly holding 39.76%. The cap on promoter’s holding in the bank is a point of contention. The declared policy is that no promoter should hold more than 10%. Recently, the P.J. Nayak committee on governance in banks proposed that promoters be allowed to retain up to 25% equity stake in banks. The bank has maintained that the condition of the licence was the promoter’s contribution would be a minimum of 49%, which was locked in for a minimum of five years. This required the promoters to hold 49% till at least 2008. The bank has in the past said there was no requirement to dilute promoter holding to below 49%. This is contrary to what is being proposed now for new bank licences.

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