…restricts Kotak Mahindra Bank from paying dividend on PNCPS
"A monetary penalty of Rs10 lakh has been imposed on the bank for bouncing of SGL, which led to shortage of balance in certain securities in the bank’s CSGL account on November 19,” said RBI
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Mumbai: The Reserve Bank of India (RBI) has restricted the private sector lender Kotak Mahindra Bank from paying out dividend on perpetual non-cumulative preference shares (PNCPS) as well.
In the notification issued by it on December 9, the RBI asked the bank not to make any dividend payment on equity shares from the profits pertaining to the financial year ended 31 March, 2020. RBI has referred to its earlier letter written to the bank dated December 4.
In this regard, RBI has clarified in its letter dated December 9 that this restriction on dividend distribution will also apply to PNSPS. The bank, on its part, has confirmed the development through its regulatory filing.
The central bank had, on December 4, issued a circular advising banks not to make any dividend payment on equity shares from the profits pertaining to the financial year ended March 31, 2020.
"It is clarified that the above restriction on dividend distribution also applies to PNCPS," the RBI said in its letter to Kotak Mahindra Bank.
The lender had, in August 2018, said the board had "approved the allotment of 100,00,00,000 PNCPS to eligible investors at the Issue price of Rs 5 per PNCPS, aggregating to Rs 500 crore pursuant to the issue".
Subsequently, its paid-up capital had then increased to Rs1,453.16 crore, and promoter holding was 19.7 per cent of the paid-up capital. On Friday, Kotak Mahindra Bank's shares closed at Rs1,919.65, marginal rise of Rs16.35 or 0.86 per cent on NSE.
