The Bombay High Court denied interim relief to Kotak Mahindra Bank Ltd. regarding the Reserve Bank of India's direction to dilute its promoter shareholding.
The case has been adjourned till Jan. 17 and the RBI will have to respond with its submission before that. As per RBI's timeline, Uday Kotak needs to bring down his stake in the bank to 20 percent from 29.73 percent by Dec. 31.
Kotak's counsel urged the court to prevent the RBI from taking any coercive regulatory action till the next hearing. The banking regulator had changed its stance in an Aug. 13 letter to the lender and asked it to reduce promoter holding as percentage of "paid-up equity voting capital" from an earlier communication that mentioned "paid up capital", he said. The new RBI governor should be allowed to consider the matter and respond to the bank's September letters which explained its position, the counsel said.
The Bombay High Court bench, led by Justice BP Dharmadhikari, held that the RBI is a "responsible regulatory body" and the decision will be left to it on whether a regulatory action should be taken if the bank doesn't comply with its direction to reduce promoter holding to 20 percent by Dec. 31.(Source : Bloomberg)