Kotak Mahindra Bank (KMB) proposes to raise the ceiling for FII investments in the bank to 40% from 37% to help it comply with RBI directive to bring down its current promoter stake by one-fourth in little over next two and half years.
The private sector bank in its notice to shareholders for the upcoming annual general meet on July 16 has sought members approval to pass a resolution to this effect.
RBI had permitted the bank to increase the FII investment limit to 37% (from earlier limit of 35%) on September 2, 2013. It is now proposed to increase the limit on total holdings of FII and sub-accounts of FIIs, FPI and QFI to 40% of the paid-up equity capital of the bank, subject to such regulatory approvals as may be necessary, said the bank in notice.
The proposal comes after the banks promoters pared down their stake from 43.58% to 40.33% by selling nearly 2.50-crore shares. Kotak Trustee Company Private Limited, a promoter group entity, had on May 30 sold shares worth R2,200 crore through a block deal to Canada Pension Plan Investment Board. After this stake sale on May 30, Kotak Trustee Company owns 0.25% stake even as Uday Kotak continues to hold 39.76% directly.
The Bank had earlier received a communication from RBI to bring down its promoter shareholding to 40% by September 30, 2014, and to 30% by December 31, 2016, as per estimates by the bank.
The bank at the AGM further will seek members approval again authorising the board of directors to borrow in excess of the aggregate paid-up share capital and free reserves up to a limit of R40,000 crore. Also proposed in the AGM is a resolution seeking members approval for the re-appointment of Uday Kotak for January 1, 2015, to December 31, 2017, to enable the bank make the requisite application to RBI for such re-appointment of Uday Kotak for a further period up to 31st December 2017.