Mumbai, July 31, 2023: Kotak Mahindra Bank issued a firm clarification on Monday refuting a recent news report that suggested the Reserve Bank of India (RBI) was pushing the bank to appoint an external candidate as its next Chief Executive Officer (CEO). The bank categorically denied receiving any formal or informal communication from RBI regarding its CEO succession plan.
In a stock exchange filing, Kotak Mahindra Bank stated, “We would like to state that there is no communication, formal or informal, from RBI to Kotak Mahindra Bank or its Board members on CEO succession.” The bank dismissed the statements made in the report as “completely incorrect and baseless.”
Earlier on Monday, Bloomberg had reported that RBI was nudging Kotak Mahindra Bank to consider external candidates to succeed Uday Kotak as the next CEO. The report also suggested that RBI had conveyed its view on this matter to the bank’s board members. However, Kotak Mahindra Bank refuted these claims, asserting that no such communication had taken place.
Furthermore, the report mentioned that RBI was reviewing whether the stakes held by the banking group in its two wholly-owned insurance units posed any risks to the bank’s stability. In response to this, Kotak Mahindra Bank clarified that it had obtained all necessary regulatory approvals, including those from RBI, for its stake in the insurance subsidiaries. The bank confirmed that it had not received any formal or informal communication suggesting otherwise.
Kotak Mahindra Bank had initiated a global search for a new CEO and engaged consulting firm Egon Zehnder for the purpose. The internal candidates for the position were reported to be Shanti Ekambaram and KVS Manian, two of the bank’s top executives. However, as per RBI regulations, the central bank has the final authority in appointing heads of Indian banks, although the banks’ boards are responsible for shortlisting potential candidates.
Notably, RBI had laid out regulations in 2021, stating that outgoing CEOs should observe a three-year cooling-off period and should not be associated with the bank or its group entities in any capacity, directly or indirectly. This measure ensures a clean break between the outgoing CEO and the bank.
Uday Kotak, the current CEO of Kotak Mahindra Bank, is set to retire from his whole-time role in December 2023. However, he will continue to serve as a non-executive board member and strategic shareholder. The banking veteran, who founded Kotak Mahindra Finance with a small team and modest office space in 1985, expressed his belief that the financial sector needs substantial capacity building to support India’s aspiration of becoming a $30-trillion economy by 2047.