Kotak Mahindra Bank’s promoters have brought down their stake in the bank at the behest of the Reserve Bank of India.
“Kotak Trustee Company Private Ltd, a promoter group entity, has sold approximately 2.5 crore shares amounting to around 3.24 per cent shareholding in KMBL,” said a statement from KMBL.
The bank said it had received communication from the RBI to bring down its promoter shareholding to 40 per cent by September 30, 2014 as per estimates provided by the bank. The present sale reduces the shareholding of the promoters to 40.33 per cent.
Paul Parambi, KMBL head, group strategy, said, “The present sale by the promoters helps us substantially meet the RBI requirement for promoter dilution by September 30, 2014.”
According to sources in the RBI, the central bank is likely to insist that promoters should not hold more than 15 per cent in private sector banks. “This is in line with the new norms governing ownership pattern in private banks. The RBI is not comfortable with higher promoter stake in banks. Once a bank is established, its equity holding should be widely dispersed,” said an official.
As per the new norms, a Non-Operative Financial Holding Company (NOFHC) which promotes a bank should not hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which should be locked in for a period of five years from the date of commencement of business of the bank. Shareholding by NOFHC in a bank in excess of 40 per cent of the capital should be brought down to 40 per cent within three years from the date of commencement of business of the bank.
The shareholding by NOFHC should be brought down to 20 per cent of the voting equity capital of the bank within a period of 10 years, and to 15 per cent within 12 years from the date of commencement of business of the bank. If the RBI insists on a promoter stake of 15 per cent in a private bank, then Kotak Mahindra Bank may have to bring it further down. Promoters hold 25.55 per cent in Yes Bank’s capital.
However, in many old generation private banks like Federal Bank, South Indian Bank and Dhanlakshmi Bank, there’s no promoter holding. In Karur Vysya Bank, promoters hold around 3 per cent stake while in Lakshmi Vilas Bank, promoter holding is around 9.78 per cent.
The RBI is also keen that the promoter doesn’t become the chief executive of a bank in order to avoid conflict of interests and other vested interests. Sources said the RBI made a mistake of allowing some private banks to come up with the promoters becoming CEOs as well. It should not happen again, said an RBI official.
The promoters and CEOs of two private banks — Kotak Mahindra and Yes Bank — are organised on the same management structure. In the case of Kotak Mahindra Bank, Uday Kotak is the executive vice-chairman and MD, while Rana Kapoor is the MD & CEO and a promoter of Yes Bank. Global Trust Bank, whose CEO and promoter was Ramesh Gelli, went down in a scam and was later merged with the Oriental Bank of Commerce.