Kotak Alternate Asset Managers Limited

Allegations: RESERVE BANK OF INDIA ALLEGED THAT KOTAK MAHINDRA BANK LIMITED, (I) DID NOT CATEGORISE GOLD / BULLION DEALERS, JEWELLERS AND TRUST RELATIONSHIPS AS HIGH RISK ACCOUNTS FROM THE ANTI-MONEY LAUNDERING PERSPECTIVE, (II) SOLD GOLD TO 5 CUSTOMERS IN CASH TRANSACTIONS EXCEEDING THE PRESCRIBED LIMIT OF INR 50,000, AND (III) FAILED TO OBTAIN THE TAX IDENTIFICATION NUMBER FROM THREE CUSTOMERS. Status: Final Sanction Detail: A FINE OF INR 15.01 MILLION EQUIVALENT TO US$252660 WAS LEVIED BY RESERVE BANK OF INDIA PAID IN FULL.(INR/USD RATE USED 59.4080 AS AT 22 JULY 2013). Summary: RBI CARRIED OUT A REVIEW OF INTERNAL CONTROL, COMPLIANCE SYSTEMS AND PROCESSES OF 39 BANKS IN INDIA IN APRIL2013 IN RELATION TO AML/KYC REQUIREMENTS. WITH RESPECT TO KOTAK MAHINDRA BANK LIMITED (KMBL), RBI HELD THAT THE RISK SCORING MODEL WAS NOT IN ACCORDANCE WITH REGULATORY REQUIREMENTS. RBI ALSO FOUND IN 5 CASES (OUT OFABOUT 13000 TRANSACTIONS), KMBL HAD SOLD GOLD TO CUSTOMERS IN CASH TRANSACTIONS EXCEEDING THE PRESCRIBED LIMIT OF INR 50,000. RBI ALSO NOTED KMBL HAD NOT OBTAINED THE TAX IDENTIFICATION NUMBER WITH RESPECT TO 3 TRANSACTIONS (OUT OF 738 TRANSACTIONS) UNDER A PRESCRIBED REMITTANCE SCHEME. A FINE OF INR15.01 MILLION WAS LEVIED ON KMBL WHICH WAS PAID ON 22 JULY 2013. KMBL, BEING A LISTED COMPANY ON THE EXCHANGES OF INDIA, DISCLOSED THIS MATTER IN ITS ANNUAL REPORT FOR 2013-14.

Allegations: SEBI ISSUED SCN UNDER SECTION 11(1), 11B AND 11B (2) OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH PROVISIONS OF SEBI (MUTUAL FUND) REGULATIONS, 1996 ALLEGING THAT ON MATURITY DATE OF KOTAK FMP SERIES 127 AND 183, CLOSE ENDED DEBT SCHEMES, INVESTORS WERE NOT PAID FULL PROCEEDS ON THE DECLARED NET ASSET VALUE(NAV) DUE TO PENDING RECOVERY OF DUES FROM THE PORTFOLIO COMPANY I.E. ESSEL GROUP OF COMPANIES. KMAMC VIDE ITSLETTER DATED AUGUST 29, 2019, HAD FILED ITS REPLY TO THE AFORESAID SCNS. SUBSEQUENTLY, SEBI SERVED A SCN VIDE ITSLETTER NO. SEBI/HO/IMD/DF2/OW/P/2020/13217/1 DATED AUGUST 13, 2020 IN THE MATTER OF KOTAK FMP SERIES 187, 189,193 AND 194, ISSUED UNDER SECTION 11(1), 11B AND 11B(2) OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READRULE 4 (1) OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995 FOR INQUIRY ANDIMPOSING PENALTY UNDER SECTIONS 15D (B) AND 15 HB OF THE ACT READ WITH PROVISIONS OF THE SEBI (MUTUAL FUNDS)REGULATIONS, 1996, SEBI VIDE ITS ORDER NO. WTM/SM/IMD/IMD-I DOF2/13158/2021-22 DATED AUGUST 27, 2021 HAS ISSUED CERTAIN DIRECTIONS AND IMPOSED PENALTY ON KMAMC. FURTHER, IT WAS DIRECTED THAT: A.KMAMC SHALL REFUND A PART OF THE INVESTMENT MANAGEMENT AND ADVISORY FEES COLLECTED FROM THE UNIT HOLDERS OF THE AFORESAID SIX FMP SCHEMES, EQUIVALENT TO THE PERCENTAGE OF EXPOSURE TO THE ZCNCDS OF THE ISSUERS IN THE RESPECTIVE SCHEMES AS ON THE DATE OF MATURITY OF THE SIX FMP SCHEMES, ALONG WITH A SIMPLE INTEREST AT THE RATE OF 15% PER ANNUM FROM THE DATE OF MATURITY OF SUCH SCHEMES TILL THE DATE OF ACTUAL PAYMENT TO THE RESPECTIVE UNIT HOLDERS OF THE SAID SCHEMES. B.SEBI HAS IMPOSED A MONETARY PENALTIES OF INR 50,00,000 (RUPEES FIFTY LAKHS ONLY/-) ON KMAMC UNDER THE PROVISIONS OF SECTIONS 15D(B) AND 15 HB FOR THE VIOLATIONS OF THE PROVISIONS OF SEBI ACT, 1992, MF REGULATIONS,1996 AS WELL AS VARIOUS CIRCULARS. C.KMAMC HAS BEEN ALSO RESTRAINED FROM LAUNCHING ANY NEW FMP SCHEME FOR APERIOD OF SIX MONTHS FROM THE DATE OF SEBI ORDER. THE BOARD OF KMAMC HAD FILED AN APPEAL BEFORE THE SECURITIES APPELLATE TRIBUNAL AGAINST THE SEBI ORDER DATED AUGUST 27, 2021. THE SAT HEARING WAS HELD ON OCTOBER 21, 2021AND HAS GRANTED THE FOLLOWING INTERIM RELIEF ON THE SEBI ORDER DATED AUGUST 27, 2021 PASSED ON KMAMC. D. STAYON DIRECTION ISSUED TO REFUND A PART OF THE INVESTMENT MANAGEMENT AND ADVISORY FEES COLLECTED BY THE APPELLANT FROM THE UNIT HOLDERS. UNDERTAKING TO BE SUBMITTED TO SEBI THAT IN CASE OF AN ADVERSE ORDER AT SAT,THE REFUND OF ABOVE MENTIONED FEES SHALL BE MADE BY KOTAK AMC WITHIN 2 MONTHS FROM THE DATE OF SAT ORDER . B.DEPOSIT 20 LACS WITH SEBI, IN AN INTEREST BEARING ACCOUNT TILL OUTCOME OF FINAL SAT ORDER. C. WE INFORMED SAT THAT WE WILL ADHERE TO THE SEBI ORDER RESTRAINING FROM LAUNCHING ANY NEW FMP SCHEME FOR A PERIOD OF SIX MONTHS FROM THE DATE OF SEBI ORDER UNDERTAKING WAS SUBMITTED BY KMAMC TO SEBI ON NOVEMBER 17, 2021 AND DEPOSIT OF RS.20 LACS WAS MADE WITH SEBI ON NOVEMBER 16, 2021. KOTAK MAHINDRA TRUSTEE COMPANY LIMITED (TRUSTEE COMPANY) AND FEW EMPLOYEES AND DIRECTOR OF KMAMC HAD BEEN SERVED A SHOW CAUSE NOTICE BY SEBI DATEDMAY 31, 2019 IN THE MATTER OF FMP SERIES 127 AND 183, SHOW CAUSE NOTICE DATED OCTOBER 12, 2020 IN THE MATTER OF KOTAK FMP SERIES 187, 189, 193 AND 194 AND SUPPLEMENTARY SCN DATED MAY 06, 2022 SECTION 11(1), 11B AND 11B(2) OFSECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ RULE 4 (1) OF THE SEBI ( PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995 FOR INQUIRY AND IMPOSING PENALTY UNDER SECTIONS 15D (B) AND 15 HB OF THEACT READ WITH PROVISIONS OF THE SEBI (MUTUAL FUND) REGULATIONS, 1996. SUBSEQUENTLY, SEBI VIDE ITS ORDER NO.ORDER/SM/AE/2022-23/17536-17542 DATED JUNE 30, 2022 HAS IMPOSED PENALTY ON KOTAK MAHINDRA TRUSTEE COMPANY LIMITED AND FEW EMPLOYEES OF KMAMC. KOTAK MAHINDRA TRUSTEE COMPANY LIMITED AND FEW EMPLOYEES OF KMAMC AREIN PROCESS TO FILE AN APPEAL BEFORE THE SECURITIES. Status: Pending Summary: THE SAT HEARING FOR SEBI ORDER DATED AUGUST 27, 2021 AND JUNE 30, 2022 HAS BEEN ADJOURNED TO MARCH 20, 2023.

Allegations: RBI VIDE ITS LETTER DATED JULY 4, 2022 HAS LEVIED A PENALTY OF INR 10.50 MILLION (USD 131250) FOR FAILURE TO COMPLY WITH THE FOLLOWING PROVISIONS/ACT: ?INR 3 MILLION (USD 37500) FOR NON-COMPLIANCE WITH DIRECTIONS ON 'CUSTOMER PROTECTION - LIMITING LIABILITY OF CUSTOMERS IN UNAUTHORISED ELECTRONIC BANKING TRANSACTIONS. ?INR 3 MILLION(USD 37500) FOR CONTRAVENTION OF THE PROVISIONS OF SUB-SECTION (2) OF SECTION 26A OF THE ACT READ WITH PARAGRAPH 3 OF THE DEPOSITOR EDUCATION AND AWARENESS FUND SCHEME' 2014 ?INR 4.50 MILLION (USD 56250) FOR NON-COMPLIANCE WITH DIRECTIONS ON BANKS, EXPOSURE TO CAPITAL MARKETS - RATIONALIZATION OF NORMS' AND ,LOANS AND ADVANCES -STATUTORY AND OTHER RESTRICTIONS Status: Final Sanction Detail: RBI VIDE ITS LETTER DATED JULY 4, 2022 HAS LEVIED A PENALTY OF INR 10.50 MILLION (USD 131250) FOR FAILURE TO COMPLY WITH THE FOLLOWING PROVISIONS/ACT: ?INR 3 MILLION (USD 37500) FOR NON-COMPLIANCE WITH DIRECTIONS ON 'CUSTOMER PROTECTION - LIMITING LIABILITY OF CUSTOMERS IN UNAUTHORISED ELECTRONIC BANKINGTRANSACTIONS. ?INR 3 MILLION (USD 37500) FOR CONTRAVENTION OF THE PROVISIONS OF SUB-SECTION (2) OFSECTION 26A OF THE ACT READ WITH PARAGRAPH 3 OF THE DEPOSITOR EDUCATION AND AWARENESS FUND SCHEME'2014 ?INR 4.50 MILLION (USD 56250) FOR NON-COMPLIANCE WITH DIRECTIONS ON BANKS, EXPOSURE TO CAPITALMARKETS - RATIONALIZATION OF NORMS' AND ,LOANS AND ADVANCES -STATUTORY AND OTHER RESTRICTIONS Summary: RBI VIDE ITS LETTER DATED JULY 4, 2022 HAS LEVIED A PENALTY OF INR 10.50 MILLION (USD 131250) FOR FAILURE TO COMPLY WITH THE FOLLOWING PROVISIONS/ACT: ?INR 3 MILLION (USD 37500) FOR NON-COMPLIANCE WITH DIRECTIONS ON 'CUSTOMER PROTECTION - LIMITING LIABILITY OF CUSTOMERS IN UNAUTHORISED ELECTRONIC BANKING TRANSACTIONS. ?INR 3 MILLION(USD 37500) FOR CONTRAVENTION OF THE PROVISIONS OF SUB-SECTION (2) OF SECTION 26A OF THE ACT READ WITH PARAGRAPH 3 OF THE DEPOSITOR EDUCATION AND AWARENESS FUND SCHEME' 2014 ?INR 4.50 MILLION (USD 56250) FOR NON-COMPLIANCE WITH DIRECTIONS ON BANKS, EXPOSURE TO CAPITAL MARKETS - RATIONALIZATION OF NORMS' AND ,LOANS AND ADVANCES -STATUTORY AND OTHER RESTRICTIONS

Allegations: THE RESERVE BANK OF INDIA (RBI) ALLEGED THAT KOTAK MAHINDRA BANK LIMITED IN REPORTED A FOREIGN EXCHANGE TRANSACTION ON NET BASIS INSTEAD OF GROSS BASIS, AS REQUIRED BY RBI. Status: Final Sanction Detail: RBI IMPOSED A PENALTY OF INR.10000/- (ABOUT USD 155) ON KOTAK MAHINDRA BANK LIMITED WHICH WAS PAID VIDE CHEQUE ON 21ST APRIL 2017. Summary: IMPORTERS/EXPORTERS WHO WISH TO NET OFF THEIR RECEIVABLES/PAYABLES WITH THEIR OVERSEAS COUNTER PARTIES, NEEDTO OBTAIN RBI APPROVAL FOR SUCH NETTING. RBI GRANTED APPROVAL FOR NETTING OFF TRANSACTION SUBJECT TO THE TERMSAND CONDITIONS THEREIN, WHICH INTER-ALIA INCLUDED A CONDITION THAT KMBL SHOULD REPORT THE TRANSACTIONS ONGROSS BASIS IN RELEVANT RETURNS HOWEVER KMBL REPORTED THE TRANSACTION ON NET BASIS INSTEAD OF GROSS BASIS. HAVING EXAMINED THE MATTER, RBI IMPOSED A PENALTY ON KMBL OF INR 10000 (ABOUT USD 155) FOR THE ERROR IN REPORTING .

Allegations: THE RESERVE BANK OF INDIA ALLEGED THAT IN RELATION TO A SECURITIES GENERAL LEDGER ("SGL") TRANSACTION IN BASKET REPO IN 182 DAY TREASURY BILLS CARRIED OUT BY KOTAK MAHINDRA BANK LIMITED'S TREASURY DEPARTMENT, THERE WAS A SHORTAGE OF SECURITIES TO THE TUNE OF RS.91.42 CRORE (ABOUT US$ 15 MILLION.) Status: Final Sanction Detail: A FINE OF INR 0.5 MILLION EQUIVALENT TO ABOUT $8,000 WAS LEVIED BY RESERVE BANK OF INDIA AND PAID IN FULL. Summary: KOTAK MAHINDRA BANK LIMITED'S ("KMBL") TREASURY FUNCTION HAD UNDERTAKEN A SUBSIDIARY GENERAL LEDGER ("SGL")BORROWING TRANSACTION IN BASKET REPO IN 182 DAY TREASURY BILLS FOR INR.200.78 CRORES (ABOUT $33 MILLION) ONAPRIL 13, 2016. HOWEVER THERE WAS AN ERROR BY KMBL'S TREASURY IN COMPUTING THE AVAILABLE SECURITIES BALANCERESULTING IN A SHORTFALL OF SECURITIES OF INR.91.42 CRORES (ABOUT $15 MILLION) IN THE SGL ACCOUNT OF KMBL WITHTHE RESERVE BANK OF INDIA. AFTER CONSIDERING KMBL'S EXPLANATION, RBI IMPOSED A PENALTY OF INR 5 LAKH (ABOUT$8000) ON KMBL FOR THE SAID SGL BOUNCE.

Allegations: THE RESERVE BANK OF INDIA ALLEGED THAT KOTAK MAHINDRA BANK LIMITED HAS FAILED TO OBTAIN A NO OBJECTIONCERTIFICATE FROM THREE BANKS THAT HAD ALREADY EXTENDED CREDIT FACILITIES TO DECCAN CHRONICLE HOLDINGS LIMITED(COMPANY) BEFORE EXTENDING A LOAN TO THE COMPANY AND FAILED TO INFORM THE BANK WHICH HAD PROVIDED WORKINGCAPITAL FINANCE TO THE COMPANY ABOUT THE LOAN. Status: Final Sanction Detail: A PENALTY OF INDIAN RUPEES 1 MILLION EQUIVALENT TO US $16434 WAS LEVIED BY RESERVE BANK OF INDIA PAID IN FULL(INR/USD RATE USED IS 60.8510 AS AT 1 AUGUST 2014). Summary: THE RESERVE BANK OF INDIA CONDUCTED A SCRUTINY OF THE BOOKS OF 12 BANKS DURING THE LAST QUARTER OF 2013 ONTHE PROCESS FOLLOWED IN THE MATTER OF LENDING TO DECCAN CHRONICLE HOLDINGS LIMITED (COMPANY). EVEN THOUGHKOTAK MAHINDRA BANK LIMITED (KMBL) WAS AWARE THAT THE COMPANY HAD CREDIT FACILITIES FROM OTHER BANKS, KMBLFAILED TO OBTAIN A NO-OBJECTION CERTIFICATE FROM OTHER BANKS BEFORE EXTENDING A LOAN TO THE COMPANY AND DIDNOT INFORM THE BANK THAT HAD PROVIDED WORKING CAPITAL FINANCE TO THE COMPANY ABOUT THE LOAN. RESERVE BANK OFINDIA LEVIED A FINE OF INR 1 MILLION ON KMBL FOR NOT FOLLOWING ITS GUIDELINES IN THE MATTER. KMBL BEING A PUBLICLISTED COMPANY ON THE EXCHANGES IN INDIA DISCLOSED THIS MATTER IN ITS ANNUAL REPORT FOR THE YEAR 2014-15.

Allegations: THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) OF INDIA HAD NOTED THAT EXIDE LIFE INSURANCE COMPANY HAD PAID INFRASTRUCTURE FACILITY CHARGES TO THE ING VYSYA BANK (WHICH MERGED WITH KOTAK MAHINDRABANK LIMITED ON APRIL, 1 2015) DURING 2013-14 AND IRDA FOUND THAT IT IS IN VIOLATION OF CLAUSE 21 OF THE GUIDELINES ON LICENSING OF CORPORATE AGENTS (DATED 14.7.2015) AND SECTION 40 OF INSURANCE ACT 1938 AS THE AMOUNT PAID HAD EXCEEDED THE LIMIT OF EXPENDITURE ON COMMISSION STIPULATED UNDER SEC 40 A OF THE INSURANCE ACT. Status: Final Sanction Detail: A FINE OF INDIAN RUPEES 0.1 MILLION EQUIVALENT TO USD 1549.90 WAS LEVIED BY RESERVE BANK OF INDIA PAID INFULL (USD/INR RATE USED 64.52 AS AT 19TH FEBRUARY 2018) Summary: IRDA HAD NOTED THAT EXIDE LIFE INSURANCE COMPANY HAD PAID INFRASTRUCTURE FACILITY CHARGES TO THE ING VYSYABANK (WHICH MERGED WITH KOTAK MAHINDRA BANK LIMITED ON 1 APRIL 2015) DURING 2013-14 AND IRDA FOUND THAT IT IS IN VIOLATION OF CLAUSE 21 OF THE GUIDELINES ON LICENSING OF CORPORATE AGENTS (DATED 14.7.2015) AND SECTION 40 OF INSURANCE ACT 1938 AS THE AMOUNT PAID HAD EXCEEDED THE LIMIT OF EXPENDITURE ON COMMISSION STIPULATED UNDER SEC 40A OF THE INSURANCE ACT. KOTAK MAHINDRA BANK LIMITED HAD REPRESENTED THAT THE BANK HAD NEVER VIOLATEDTHE PROVISIONS OF ACT NOR ANY ADVERSE REMARKS WERE IDENTIFIED BY IRDA DURING THE INSPECTION OF THE AGENCY OFTHE BANK AND SINCE THIS CASE PERTAINED TO PAYMENTS MADE PRIOR TO THE MERGER OF ING VYSYA BANK WITH KOTAK MAHINDRA BANK LIMITED, THE BANK MAY NOT BE PENALISED. HOWEVER IRDA MAINTAINED THAT IT IS A VIOLATION OF THE ACT AND HENCE NEED TO BE DEALT ACCORDINGLY AND LEVIED A FINE OF INR 0.1 MILLION.

Allegations: THE RESERVE BANK OF INDIA (RBI) HAD IMPOSED A PENALTY OF INR 20 LAKH (INR 2 MILLION) ON KOTAK MAHINDRA BANK LIMITED IN FEBRUARY 2019 FOR KNOW YOUR CUSTOMER (KYC) DEFICIENCIES FOUND IN OPENING ONE SAVINGS ACCOUNT OPENED IN THE YEAR 2010. Status: Final Sanction Detail: A FINE OF INR 2 MILLION EQUIVALENT TO USD 27898 WAS LEVIED BY THE RESERVE BANK OF INDIA WHICH WAS PAID INFULL. (USD/INR RATE USED 71.69 AS AT 4TH FEBRUARY 2019) Summary: THE RBI HAD IMPOSED A PENALTY OF INR20 LAKH ( INR 2 MILLION) ON KOTAK MAHINDRA BANK LTD IN FEBRUARY 2019 FOR KYC DEFICIENCIES FOUND IN OPENING ONE SAVINGS ACCOUNT OPENED IN THE YEAR 2010. THIS WAS A CASE OF FAILURE OF THE PERSONNEL IN MEETING THE CUSTOMER BEFORE OPENING THE ACCOUNT. AS PER THE BANK'S PROCESSES IT IS MANDATORY TO MEET THE CUSTOMER BEFORE ON-BOARDING THE CUSTOMER. IN THE CITED CASE, BRANCH PERSONNEL HAD VISITED THE HOUSE OF THE CUSTOMER BUT DID NOT MEET THE CUSTOMER AND HAD CERTIFIED THAT THEY MET THE CUSTOMER. ACTION HAS ALREADY BEEN TAKEN ON THE ERRANT EMPLOYEE AND THE PROCESS HAS BEEN REITERATED FOR STRICTER COMPLIANCE.

Allegations: THE RESERVE BANK OF INDIA (RBI) HAS, BY AN ORDER DATED JUNE 06, 2019, IMPOSED A MONETARY PENALTY OF INR 2 CRORES(RS 20 MILLION) ON KOTAK MAHINDRA BANK LIMITED (THE BANK) FOR FAILURE TO FURNISH INFORMATION ABOUT DETAILS OFTHE SHAREHOLDING HELD BY ITS PROMOTERS AND TO SUBMIT DETAILS OF THE PROPOSED COURSE OFACTION/PLANS/STRATEGY OF THE BANK FOR COMPLYING WITH THE PERMITTED TIMELINE FOR DILUTION OF PROMOTERSHAREHOLDING. Status: Final Sanction Detail: A FINE OF INDIAN RUPEES 20 MILLION EQUIVALENT TO USD 289184 WAS LEVIED BY RESERVE BANK OF INDIA PAID IN FULL(USD/INR RATE USED 69.16 AS AT 06TH JUNE 2019). Summary: THE RESERVE BANK OF INDIA (RBI) HAS, BY AN ORDER DATED JUNE 06, 2019, IMPOSED A MONETARY PENALTY OF RS 2 CRORES(RS 20 MILLION) ON KOTAK MAHINDRA BANK LIMITED (THE BANK) FOR FAILURE TO FURNISH INFORMATION ABOUT DETAILS OF THE SHAREHOLDING HELD BY ITS PROMOTERS AND TO SUBMIT DETAILS OF THE PROPOSED COURSE OFACTION/PLANS/STRATEGY OF THE BANK FOR COMPLYING WITH THE PERMITTED TIMELINE FOR DILUTION OF PROMOTER SHAREHOLDING.