The Central Bank said that the action is based on the deficiencies in regulatory compliance.
The Reserve Bank of India (RBI) has slapped a penalty of ?2 crore on Kotak Mahindra Bank, for the non-state lender’s failure to adhere to the regulator’s diktat on promoter shareholding.
The central bank has been engaged in a dispute 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 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 RBI came to the conclusion that the 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.
Kotak Mahindra said it was examining the order.
“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.
Uday Kotak had recently told the Bombay High Court in an affidavit that he was in full compliance of the RBI rules and the regulator had never communicated to the promoters on the matter of shareholding.
The central bank had submitted that any leeway to Kotak would lead to subversion of its autonomy.
