India's third-largest private sector bank -- Kotak Mahindra Bank, on Monday, said the Reserve Bank of India (RBI) has allowed Life Insurance Corporation of India (LIC) to increase its stake in the bank up to  9.99 percent.

The validity of the approval is for one year, the bank said.

“This is subject to compliance with the provisions issued by the Securities and Exchange Board of India (SEBI), provisions of the Foreign Exchange Management Act, 1999 and any other guidelines/regulations and statutes, as applicable,” the bank said.

Currently, LIC holds a 4.96 percent stake in the private sector bank.

Promoters Uday Kotak and family own a 26 percent stake in the Bank, while Canada Pension Plan Investment Board has a 6.37 percent stake. 

In 2020, Kotak went to court challenging RBI’s direction to slash promoter stake to 15 percent. The RBI later nodded Kotak to retain a stake at 26 percent.

LIC has a stake in several private and public sector banks. It has a stake in almost 24 scheduled commercial banks, data from Capitaline shows.

It owns a 49.24 per cent stake in IDBI Bank, whereas 8.8 per cent in Canara Bank, 8.3 per cent in Punjab National Bank and State Bank of India, 8.2 per cent in Axis Bank, and 7.6 per cent in ICICI Bank.

Following holding 9.99 per cent in Kotak Mahindra Bank, LIC will be the second-largest shareholding of the insurance company in a scheduled commercial bank.