Kotak Mahindra Bank has lost nearly half a billion dollars in market cap after the billionaire promoter was fined by the RBI
- The bank's shares were among the list of top losers on the Nifty on Monday, when the markets at large were buoyant.
market capitalisationfor the stock has falled over ₹3,400 crore since Thursday's close.
- On Friday, the RBI fined the bank because its billionaire promoter Uday Kotak won't give up stake as per regulations.
Kotak Mahindra Bank's shares were among the list of top losers on the Nifty on Monday, when the markets at large were buoyant. The market capitalisation for the stock has falled over ₹3,400 crore (nearly $0.5 billion) since Thursday's close.
On Friday (May 7), the Reserve Bank of India (RBI) fined the company ₹2 crore because its billionaire promoter Uday Kotak won't give up stake as per regulations.
A private bank's promoter holding has to be brought down to 40% within three years of operations, 20% within 10 years and 15% within 15 years ,according to RBI's banking licensing norms. Kotak Mahindra Bank got the licence from RBI in February 2003, and as per data from the National Stock Exchange on Monday (May 10), the promoter shareholding was nearly as high as 30%.
The bank was directed to convey its commitment to reduce promoter shareholding as per the timelines stipulated, which the bank failed to comply with and a show cause notice was issued to the bank.
"After considering the reply received from the bank, submissions made by the bank during personal hearing and the documents submitted by it, RBI came to the conclusion that the bank had failed to comply with the directions issued by RBI and decided to impose monetary penalty on the bank," the RBI said.
In a stock exchange filing on Friday, Kotak Mahindra Bank said it is examining the order.
The apex bank, however, noted that the action is based on the "deficiencies in regulatory compliance" and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank.
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