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Private lender Kotak Mahindra Bank today said that Life Insurance Corporation (LIC) has received approval from the Reserve Bank of India (RBI) to increase its stake in the Bank up to 9.99%.

While announcing reformed rules on the structure of private sector banks, the RBI had on Friday said that non-promoter share holdings would continue to be capped at 10% for individuals and non-financial institutions.

The approval by the Central Bank will be valid for one year.

Currently, LIC holds 4.96% in Kotak Bank, as per the information available from the shareholding pattern till 30 September.

"We wish to inform you that Kotak Mahindra Bank Limited ("Bank") has received an intimation from Life Insurance Corporation of India ("LIC") stating that the Reserve Bank of India had granted its approval to UC, for increasing its holding in the Bank up to 9.99% of the paid up equity share capital of Bank," Kotak said in an exchange filing.

On Monday, Kotak Mahindra Bank shares were trading 2.55% higher in noon deals at 2,014.30 on NSE.

LIC's raising of stake is subject to compliance with the provisions of the directions given by RBI in 2015 and required regulations by the market regulator SEBI.

The RBI norms mandate that every person or an entity who intends to make an acquisition in Private Banks of more than 5% stake, prior approval is needed from the Central Bank.

LIC has made an application to the Reserve Bank and on the receipt of it, the RBI has sought recommendations on the acquisition from the concerned Bank.

Meanwhile, LIC, which is one of the biggest institutional investors in India’s stock market, is aiming to list on domestic bourses by March next year in an initial public offering estimated at $12 billion, set to be the country's biggest.

Kotak Mahindra Bank, one of the largest private banks in India, boasts of a free float market capitalisation of nearly 3 lakh crore.

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