MUMBAI, Dec. 18 -- The Reserve Bank of India (RBI) has barred Kotak Mahindra Bank from paying dividend on perpetual non-cumulative preference shares (PNCPS) worth '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.
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 preference shares promise fixed annual dividends from net profit, but in case the firm fails ...