INSUBCONTINENT EXCLUSIVE:
By Rahul Satija and Saloni ShuklaGoing toe to toe with a powerful regulator isn't normally good for your financial health
But it has proven to be profitable, on paper at least, for India's billionaire banker Uday Kotak.
The founder of Mumbai-based Kotak
has seen his wealth nearly triple since March 2014, when the Reserve Bank of India said he failed to meet the first of its successive
milestones to reduce his stake in the bank
His wealth now stands at $11.4 billion, according to the Bloomberg Billionaires Index, mainly due to share price gains that have increased
the value of his holding in KMB, currently 30 percent.
The latest RBI deadline was for Kotak to reduce his holding below 20 percent by the
end of last year, part of the regulator's industrywide efforts to reduce the influence of founding shareholders in Indian banks
Kotak Mahindra is taking legal action to contest that, arguing that a sale last year of 5 billion rupees ($72 million) in preference shares
complies with central bank rules
A new hearing is due to take place on the bank's motion later Tuesday in the Bombay High Court.
Kotak Mahindra shares have outperformed
those of most of its peers, thanks to the bank's success in avoiding some of the asset quality concerns that have weighed on many of the
KMB boasts one of the lowest bad-loan ratios and one the highest net interest margins among Indian banks, making its shares the best
shield Kotak Mahindra from any penalties that might be imposed by the RBI over the failure to cut Uday Kotak's equity stake below 20
In September, the central bank ordered Bandhan Bank Ltd
not to raise Chief Executive Officer Chandra Shekhar Ghosh's salary and restricted the lender from opening new branches without its
communications, the needs of the company, and the law
He noted that the bank's share price gains have accrued to all shareholders, not just its founder
deadlines set by the bank for progressively reducing its founder's stake in 2014 and 2016, though it did meet a dilution requirement set
by the RBI in 2017, according to court documents.
Shareholders would lose out if Uday Kotak is forced to reduce his stake, according to J.N
regulator, said Ajay Bodke, head of investment strategy at Prabhudas Lilladher Pvt Ltd
