Private sector lender Kotak Mahindra Bank on Monday said it has not received any communication from the Reserve Bank on the succession of its executive officer (CEO).
Its current CEO Uday Kotak’s term ends in December this year, and as per RBI’s new rules on limiting the tenures of CEOs, he cannot continue in the office. Kotak has announced that he will continue as a non-executive board member in the lender, in which his holding stands at 26 per cent, making it one of the few large private sector banks to have prominent promoter shareholders.
“We would like to state that there is no communication, formal or informal, from the RBI to Kotak Mahindra Bank or its Board members on CEO succession,” the bank said in a statement. It was responding to a media report, which said the regulator is nudging the bank to appoint an outsider as a successor. The report also said that the RBI is reviewing whether the stakes held by Kotak Mahindra Bank in wholly-owned insurance subsidiaries pose any risks.
According to an earlier media report, the bank has engaged an executive search firm for finding the successor, and KVS Manian and Shanti Ekambaram were among the internal candidates in the fray. The bank statement said it has approvals from regulators, including the RBI, on the quantum of stakes it holds in the insurance arms, and has not received any communication from the watchdog even on this aspect. It can be noted that investors have shown some unease about the issue of Uday Kotak’s successor lately as reflected in some share price corrections.
In his letter to shareholders, Kotak expressed concerns about the impact of over-regulation on entrepreneurial spirit. “I feel the financial sector players risk becoming more robotic, curbing the entrepreneurial flair since the fear of making a mistake overrides the joy of creation and development. While we need ‘Arjuna’s eye’ on risk management, we must prevent bureaucratisation of financial services,” Uday Kotak had written. Interestingly, Uday Kotak’s son Jay is also active in the bank, and in the past, Manian said that his role in the bank will be decided on merit.