Kotak Mahindra bank is geared up to initiate a share sale for institutional investors to raise capital as much as one to two billion dollars. The private sector bank got the authorization from its shareholders for carrying out the sale.
On Monday, the private lender informed the stock exchanges that it got the approval through a postal ballot in electronic form. Moreover, it received approval by the shareholders to raise capital through issuing of 6.5 crore equity shares of Rs. 5.
The bank’s share had hit a high earlier this year after it arrived at a settlement with the RBI in which the promoters agreed to restrict their voting rights. In addition, the said capital-raise will reduce the promoter’s share in the financial institute by one percent to 29 percent. However, it has to bring down the holding till 26 percent later this year.
On Tuesday, the bank shares kept fluctuating between green and red sides. At 12.57 IST, the shares dropped by 1.20 points or 0.10 percent at 1,159.00. Therefore, at the current prices an issue of 6.5 crore shares will clear up around Rs. 7,500 crore.
In response to the COVID-19 outbreak, the bank is working cautiously by increasing its tier-1 capital as it is likely that the sale of shares will bring the promoter’s holding faster. Additionally, the financial institution has gone slow on loans and cut interest rates on saving accounts. This will be the third time that the bank has issued cuts in interest rates on deposits. Earlier, the bank gave 4.5 percent on deposits over 1 lakh but now presents 4 percent. Similarly, over deposits less than 1 lakh it offers a 3.5 percent interest rate.