The Reserve Bank on Monday said the recent stake dilution by Kotak Mahindra Bank founder Uday Kotak does not meet its regulatory norms on the same, something the private sector lender contested. It can be noted that on August 2, Kotak had sold a part of his stake in the lender and bringing down his personal holding to under 20 percent by issuing perpetual non- cumulative preference shares (PNCPS).

"The RBI today communicated to us that our PNCPS issuance does not meet the promoter holding dilution requirement of the regulator," the fourth largest private sector bank said in a regulatory filing. The bank, however, maintained that the equity dilution does meet the regulatory requirement.