Locked in a legal battle with RBI over promoter stake dilution issue, Kotak Mahindra Bank has alleged the regulator is "unfairly" creating an impression that the lender was trying to further promoter Uday Kotak's interest. Countering an affidavit filed by the Reserve Bank of India (RBI) in the Bombay High Court, where it has challenged a regulatory directive, Kotak Mahindra Bank said, "The reply unfairly seeks to create an impression that the promoters' interest is being furthered through the petition and seeks to question the locus standi of the petitioners (the bank) in challenging the Reduction Communications."

RBI had asked the bank to cut promoter shareholding to 20 per cent of paid-up capital by December 31, 2018, and 15 per cent by March 31, 2020. As on December 31, 2018, Uday Kotak, the bank's vice chairman and managing director, held 29.72 per cent stake in the bank. The lender in August 2018 had proposed perpetual non-cumulative preference shares (PNCPS) to cut promoter holding to 19.70 per cent, which the RBI rejected. The bank has challenged RBI's contention in the Bombay High Court, which is hearing the matter. The RBI's bank licensing rules mandate that a private bank's promoter will need to pare holding to 40 per cent within three years, 20 per cent within 10 years and to 15 per cent within 15 years.