The Bombay High Court denied interim relief to Kotak Mahindra Bank Ltd. over the Indian central bank's instructions for the lender to dilute its promoter shareholding to below 20% by Dec. 31, the Business Standard reported Dec. 18.

In a Dec. 17 hearing, the judiciary said it would leave it to Reserve Bank of India as a responsible regulator to decide if the dilution criteria was met by the deadline. The case has been adjourned until Jan. 17.

The lender took the matter to court after one of its major shareholders, Uday Kotak, was barred from lowering his stake through a preference share issue. This came after the RBI ordered Kotak Mahindra Bank earlier in the year to lower its promoter shareholding to 20% of its paid-up capital by Dec. 31, and to 15% by March 31, 2020.

The bank lowered the promoter's shareholding to 19.7% from 30.3% through an issue of preference shares in August, but RBI said the exercise does not meet the dilution requirement.

Kotak Mahindra Bank has argued that the only way for it to meet the requirements in such a short time is to bring in a foreign investor.