Kotak Bank awaits FDI norms for stake move

Kotak Mahindra Bank is awaiting the finance ministry's guidelines on the proposed 74 per cent foreign direct investment (FDI) in private sector banks before making a final decision on diluting promoters' stake.

"If the government allows 74 per cent FDI in banks, then why shouldn't promoters be allowed to have a similar stake," Uday Kotak, executive vice-chairman and managing director of Kotak Bank, asked.

As per the existing Reserve Bank of India guidelines, the promoters of private banks should not hold more than 49 per cent stake in the equity.

At present, the promoters of Kotak Bank hold about 60 per cent of stake in the Rs 60 crore equity, while foreign institutional investors have about 15 per cent.

"If the finance ministry does not permit us to hold more than the 49 per cent even after the new guidelines, we have no other option but to dilute the stake," Kotak told mediapersons here on the occasion of the launch of the bank's first branch in the city.

The bank's net worth currently stands at Rs 1,500 crore, while its capital adequacy ratio is at 20 per cent.

"Within nine months of converting our non-banking finance company (NBFC) into a bank, we could mobilise stable long-term deposits of Rs 1,200 crore. This is in addition to about Rs 1,700 crore of current account deposits," he said.

The bank's advances portfolio currently stands at Rs 4,000 crore. The bank has 11 branches across the country including the one opened here today. The network will be expanded to 50 branches in three years.

"We are planning to open seven more branches by end of this fiscal," Dipak Gupta, executive director of the bank said.

The bank is also planning to convert its 60 plus auto finance branches and 200 franchisees into some form of retail outlets of the bank.

Commenting on the inorganic growth options before the bank, Kotak said, "At this point, we are in no hurry to look at acquisitions. We would look at them later."