Mumbai: Kotak Mahindra Bank Ltd on Tuesday told the Bombay high court that its promoters are ready to give an undertaking to cap their voting rights at 20% despite holding a 30% stake in the private lender to allay concerns of the Reserve Bank of India (RBI) on concentration of power.

Kotak Mahindra Bank moved the Bombay high court after RBI rejected its proposal to issue perpetual non-convertible preference shares in August to comply with rules concerning promoter shareholding. Billionaire founder Uday Kotak, who holds about 30% of the bank, has been asked by RBI to lower his stake to 20% by the end of December 2018 and to 15% by March 2020.

While the next hearing on the case has been scheduled for 1 April, RBI’s senior counsel Venkatesh Dhond sought a week’s time to file an affidavit in response to the bank’s writ petition.

The case, being heard by a two-judge bench of Justices B.P. Dharmadhikari and Sarang V. Kotwal, is being closely watched as it is the first time that a bank has moved court on a RBI directive.

The court observed that the matter is not so simple that interim relief can be provided and declined to grant a stay on the deadline set by RBI.

In December, Dhond said the dilution of promoter stake is aimed at ensuring that voting power is not concentrated in the hands of a single group and all banks have complied with the rule.

In a similar case, RBI earlier froze salaries of Bandhan Bank chief executive and founder Chandra Shekhar Ghosh and also denied the private lender permission to open branches.

A 10 March 2019 PTI report said RBI is reviewing ownership norms for private banks. RBI is looking at either setting up a panel to review these norms or granting more time to meet these rules, it said.

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