Kotak Bank Promoter Donated ₹ 60 Crore To BJP Via Electoral Bonds: Infina Finance, a part of Kotak Mahindra Bank’s promoter group, gave the BJP Rs. 60 crore electoral bonds were donated, PTI reported. Although Infina Finance is associated with the Kotak family and is listed as the promoter group, it does not own shares in the bank. Notably, Kotak Mahindra Bank is currently facing an RBI probe that has barred it from issuing new credit cards due to “serious deficiencies” in IT risk management.
As per the BSE shareholding filing as of March 2024, the promoter and promoter group companies together hold a 25.89 percent stake in Kotak Mahindra Bank.
Bank founder and non-executive director Uday Kotak is the largest shareholder of Kotak Mahindra Bank with 25.71 percent. The remaining 0.18 percent shares are held by other companies of the organizing group.
Mumbai-headquartered Infina Finance has given the Bharatiya Janata Party (BJP) Rs. 60 crore electoral bonds have been donated. According to a filing by the State Bank of India (SBI) with the Election Commission, non-banking financial companies (NBFCs) bought these bonds worth ₹1 crore in 2019, 2020 and 2021. The data was made available to the public last month.
Infina Finance Private Limited, as stated on its website, was established in 2008 and is engaged in the business of capital markets financing, proprietary trading, and investments.
Infinite, an RBI-registered systemically important non-banking non-deposit finance company reported a profit of ₹105.55 crore in 2022-23. The company made a total of Rs. 227.84 crores in revenue.
On Wednesday, the Reserve Bank of India (RBI) barred Kotak Mahindra Bank from accepting new customers and issuing new credit cards through its online and mobile banking channels with immediate effect, citing what the regulator called “deficiencies in the lender’s IT risk management”. told “Serious deficiencies” were identified.
Tenure of Kotak
Months after an agreement on the promoter group’s stake, a fresh question has arisen over Uday Kotak’s continuation as CEO of Kotak Mahindra Bank.
In June 2020, the Reserve Bank proposed that the tenure of a promoter as CEO or whole-time director of a bank should be limited to 10 years. Uday Kotak led Kotak Mahindra Bank as CEO for 17 years.
While the Reserve Bank’s proposal was still under consideration, the central bank granted a three-year extension to Uday Kotak in December 2020.
The Reserve Bank’s proposed policy finally came into force on April 26, 2021, with a minor adjustment: the tenure of promoter CEOs in private banks can be 12 to 15 years.
More importantly, the Reserve Bank’s guidelines allowed an exception to those who had already received extensions. It says that managing directors, chief executive officers and whole-time directors of banks who are “between the ages of 12 and 15 years from the date of coming into force of these directions may be permitted to complete their current tenure, provided that the same has already been approved by the Reserve Bank.
only allowed.” In other words, despite the new policy, Uday Kotak may remain the CEO and Managing Director of Kotak Mahindra Bank. Two other bank CEOs who benefited from the Reserve Bank’s decision were Federal Bank’s Shyam Srinivasan and DCB Bank’s Murali Natarajan, whose tenure was also extended.
However, the RBI gave him only one year extension compared to three years extension given to Uday Kotak. The Reserve Bank’s decision came soon after the Kotak Group donated to the ruling party. On April 7, 2021, Infina Finance raised Rs. Electoral bonds worth 25 crores were bought.
The amount was deposited with the BJP on April 12, 14 days before the RBI announced its policy. Kotak resigned as MD and CEO of Kotak Mahindra Bank on September 1, 2023, four months before the end of the extension. He holds 25.71% stake in the bank.
