Kotak Mahindra Bank on Monday said that Life Insurance Corporation (LIC) has received permission from the Reserve Bank of India to raise its stake in the private sector lender to 9.99 per cent.

The life insurer had a stake of 4.96 per cent at the end of quarter ended September 30, 2021. The approval from the RBI is valid for a year.

Under the current norms, prior approval of the RBI is needed if an entity wants to have a shareholding of over 5 per cent in a private sector bank.

Shares of Kotak Mahindra Bank rallied at the stock exchanges on Monday on the development.

On the BSE, the scrip hit a day’s high of Rs 2,043.55 — a gain of over 4 per cent. It later ended at Rs 2,020.20-marking a rise of Rs 57.25 or 2.92 per cent over the last close.

At close, the private sector bank had a market cap of Rs 4,00,657.98 crore as per BSE data.

Last Friday, the RBI had accepted some of the proposals made by an internal working group.

One such proposal pertained to the non-promoter shareholding in banks.

Here, the central bank said that they will be capped at 10 per cent of the paid-up voting equity share capital, in case of natural persons and non-financial institutions or entities.

However, the ceiling will be at 15 per cent in case of all categories of financial institutions or entities, supranational institutions, public sector undertaking or government.