New Delhi, Dec. 11 -- The Reserve Bank of India (RBI) has barred Kotak Mahindra Bank from paying dividend on perpetual non-cumulative preference shares (PNCPS) worth Rs.500 crore that it sold in 2018 to comply with a regulatory ceiling on promoter shareholding.

The regulator first ordered banks and certain categories of non-banks on 4 December not to pay dividends from their profits in FY20 to conserve capital but clarified on Thursday that it applied to PNCPS as well in a letter to Kotak Mahindra Bank.

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The clarification is a blow for preference shareholders of banks as the securities fetch a fixed dividend, and are seen as quasi-debt. Non-cumulative prefere...