Uday Kotak has resigned as managing director and chief executive officer of Kotak Mahindra Bank Ltd. with effect from Sept. 1.
The resignation comes four months ahead of his retirement on Dec. 31.
Dipak Gupta, joint managing director of the bank, will conduct the duties of MD and CEO until Dec. 31, when a new CEO will be appointed at the private bank, it said in an exchange notice on Saturday.
Kotak, who founded Kotak Mahindra Finance Ltd. as a non-bank finance company in 1985, has been the bank's CEO since 2002.
"I have cherished being a part of this entire journey. It is now time to move on ... I have mulled over this decision for some time and believe this is the right thing for this institution," Kotak said, in his hand-written resignation letter.
My letter is attached pic.twitter.com/vcSIEcvy2r
September 2, 2023On Dec. 31, along with Kotak, the tenures of Gupta and Chairman Prakash Apte are set to end at the bank.
According to Kotak, the bank has taken necessary steps on succession and is waiting for the Reserve Bank of India's approval for the next CEO.
Whole-time directors KVS Manian and Shanti Ekambaram are frontrunners for the CEO role from within the bank. Typically in such appointments, the regulator also requires the bank to submit at least one external candidate's name. It is not clear who this person is.
Over the next few months, Kotak will be engaged with personal and family commitments, he said. Owing to functions being prepared for his elder son's wedding and his tenure ending at such close proximity, he has decided to stagger the transition, he said in his resignation letter.
"We should not really read anything into this announcement except what is stated. His son's wedding is an important enough reason," said Deven Choksey, managing director at KR Choksey Holdings Pvt. "We should also keep in mind that he was set to retire in a few months anyway. So, he may have wanted to take some time and prepare for a more strategic role at the bank."
Vikas Khemani, founder of Carnelian Asset Advisors, too, expects that the market is unlikely to behave negatively to Kotak's resignation.
"This was an expected move keeping in mind the succession planning at the bank. Whatever Mr Kotak does, he does with a lot of thought behind it. This is likely done in that same fashion," Khemani said.
Vinit Bolinjkar of Ventura Securities said that the change in leadership might lead to some short-term volatility, but it is more important to watch out for the direction and energy that the new CEO will bring to the bank. Another thing to watch out for is how the new leader deals with credit appraisal at the bank.
"We need to understand that in Kotak Mahindra Bank, any lending above Rs 25 crore was personally supervised by Uday Kotak. So, the credit appraisal was concentrated with him. To my mind, Uday Kotak was one of the best credit appraisers and that is very well outlined in the kind of organic growth maintained," Bolinjkar said.
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