Kotak Mahindra Bank knocks door of Bombay HC against RBI decision

Shares of Kotak Mahindra Bank tanked more than 6 per cent on the bourses after the lender moved Bombay High Court against RBI's decision with respect to the bank reducing promoter holding using preference shares.

The stock plummeted 6.56 per cent to close at Rs 1,198.15 on the BSE. Intraday, the scrip touched a low of Rs 1,188.8, a decline of 7.28 per cent. On the NSE, the stock fell 6.11 per cent to settle at Rs 1,201.5.

On Friday, shares of Kotak Mahindra Bank soared nearly 14 per cent intra-day amid speculation that Warren Buffett's Berkshire Hathaway Inc was planning to pick up a stake in the private sector lender in a multi-billion dollar deal. The bank, in a regulatory filing on Monday, said it has moved the Bombay High Court against RBI's decision with respect to the bank reducing promoter holding using preference shares.

In August, Uday Kotak, the founder and promoter of Kotak Mahindra Bank, has pared down his stake in the bank to 19.70 per cent from about 30 per cent following issuance of preference shares.

Within few days, the Reserve Bank said the stake dilution by Kotak does not meet its regulatory norms on the same, something the private sector lender contested.

"We continue to believe that we have met the requirement and will engage with RBI in this behalf," Kotak Mahindra Bank informed the exchanges on Monday citing its regulatory filing made on August 14.

Earlier, the RBI had asked promoters of the bank to bring down their stake to 20 per cent by December 2018 and 15 per cent by March 2020 in line with the guidelines for new bank licences released four years ago and then under 10 per cent later on.