On Tuesday, Uday Kotak, executive VC and MD of Kotak Mahindra Bank unloaded 5.6 crores or 56 million shares to conform with promoter shareholding norms of the Reserve Bank of India. The Bank’s share price rose almost by 6 percent in the early trading session.
Currently, Kotak Mahindra Bank is the top gainer in the NSE. In addition, the shares were trading at 1,316.5 with 68 points or 5.46 percent, at 11.13 IST.
Uday Kotak sold the shares in the company at Rs 1,240 per share. Moreover, this indicated a 0.6 percent discount to Rs. 1,248.40 which was the closing price in Monday’s trade. However, this deal suggests a reduction in his shareholding to 26.1 percent from 28.93, down by 2.9 percent.
In January, the bank reached an agreement with the regulator to depose Uday Kotak’s stake to 26 percent to obey the promoter shareholding norms. In addition, Uday Kotak settled to not buy paid-up voting equity shares until the promoter shareholding reaches 15 percent or higher as permitted by the RBI.
As per RBI rules, private bank promoters have to bring down their shareholding by a certain percentage over the years of attaining their license. Therefore, Kotak Mahindra Bank was expected to bring down the stakes to 15 percent by March. However, this situation is now relaxed and RBI has allowed a steady decline.
In addition, from April 1, voting rights of Uday Kotak stands restricted at 15 percent regardless of his actual shareholding being higher. Earlier, because of the disputes with its regulator, Kotak ended up taking RBI to the Bombay High Court. Following in January 2020, an agreement was reached and the petition filed by Kotak was withdrawn.
