The board of directors of Kotak Mahindra Bank has approved increasing the shareholding of foreign portfolio investors (FPIs) in the lender to 43 per cent from the current limit of 42 per cent.

The increase in FII/FPI ceiling limit is subject to statutory/ regulatory approvals as may be necessary.

At the bank’s extraordinary general meeting held on May 9, shareholders had approved a resolution which sought an increase in the ceiling limit on total holdings of FIIs and FPIs through primary and secondary routes to such percentage as the board may decide from time to time, not exceeding 49 per cent of the paid-up equity capital of the bank.

The move to increase the FII/FPI limit comes in the backdrop of Kotak Mahindra Bank receiving a communication from the RBI to bring down the promoter shareholding to 30 per cent by June 30, 2017, 20 per cent by December 31, 2018, and 15 per cent by March 31, 2020.

In the quarter ending March 31, promoter and promoter group held 32.08 per cent stake in the bank, with Executive Vice-Chairman & MD Uday Kotak holding a chunk (31.77 per cent) of the stake. As at March-end 2017, FPIs held 38.56 per cent stake in the bank.

On May 16, the bank had announced the closure of its qualified institutional placement, which had opened on May 11. The securities issuance committee had then determined and approved the issue price of ₹936 an equity share for issuance of 6.2 crore equity shares to be allotted to qualified institutional buyers.

The QIP, coupled with the increase in the FII/FPI ceiling limit, will help the promoters bring down their stakes in the bank in line with the RBI prescription.