RBI imposes Rs 2 crore penalty on Kotak Mahindra Bank for lack of disclosure of promoter stake
The Reserve Bank of India has imposed a penalty of Rs 2 crore on Kotak Mahindra Bank for the non-state lender’s failure to comply with regulator’s directions on promoter shareholding.
The RBI said that the action is based on the deficiencies in regulatory compliance.
The central bank has been engaged in a conflict with Kotak Mahindra since 2014 over its failure to meet the milestone for stake reduction by Uday Kotak, the billionaire promoter of the bank.
“The penalty is for alleged failure to comply with RBI’s purported directions to submit details of the promoter shareholding, the proposed course of actions/plans/strategy by the bank and not conveying the commitment of the bank for achieving promoter dilution as per the timelines stipulated,” Kotak Mahindra said in an exchange filing.
According to source, the lender moved court on December 10, challenging the RBI directive, which had instructed it to dilute the promoter shareholding from around 30% to a maximum of 20% of its paid-up voting equity capital by December 31, 2018, and to 15% by March 31, 2020. The Mumbai High Court is expected to hear the matter in January next year.
The regulator said a show-cause notice was issued to the lender for not achieving the promoter holding dilution as per the timelines stipulated by it.
The central bank came to the conclusion that Kotak Mahindra Bank had failed to comply with the directions and decided to impose the monetary penalty on the bank, the regulator said in a press release.
The RBI had submitted that any scope to Kotak would lead to subversion of its autonomy.