Mumbai: Proxy advisory firm Stakeholder Empowerment Services (SES) has raised concerns over a Reserve Bank of India (RBI) rule restricting promoters from holding more than a 15% stake in banks.

According to the RBI private bank ownership norm, promoter holding in a bank should not exceed 15% in order to ensure better governance and diversified shareholding.

This threshold does not have a rationale as it is not mentioned in the Banking Regulation Act, the takeover code by the Securities and Exchange Board of India (Sebi) labels an entity a promoter if it has holding of above 25%, and the Companies Act prescribes a threshold to vote on resolutions, SES said in a report on Monday, in which it examines the extraordinary shareholder meeting (EGM) resolution of Kotak Mahindra Bank.

RBI has directed Kotak Mahindra Bank to reduce its promoter holding to 30% from the current 33.7% by the end of June. The residual divestment will happen in subsequent tranches. The bank has issued notice for an EGM on 9 May, seeking shareholder nod to issue 62 million shares for dilution of a 3.25% stake. To bring its promoter stake to 15%, Kotak would have to issue about 2.1 billion new shares worth a total of Rs2.21 trillion.

SES points out that stake dilution by issuing fresh equity may lead to ownership of banks being vested with foreign institutional investors, or FIIs. “Which investor(s) has got such amount of funds? Obviously, FIIs have these funds. Should we encourage foreign ownership of our homegrown successful banks? Does RBI believe an Indian owned bank is dangerous as compared to foreign owned?" questions the report. A spokesperson for Kotak declined to comment.

“The threshold for having a stake in a bank is to ensure a diversified shareholding and that there is no undue influence by any single or group of shareholders. Even globally there is a policy of limiting shareholding by an individual/ group," said Usha Thorat, ex-deputy RBI governor.