No word from RBI on new CEO: Kotak Bank

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Kotak Mahindra Bank has said it has not received any communication from the Reserve Bank on the succession of its executive officer (CEO). The term of current chief executive offiver Uday Kotak’s term comes to an end in December. As per per RBI’s new rules he cannot continue in the office.

Uday Kotak has announced that he will continue as a non-executive board member in the lender.  “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. Uday Kotak holds 26 per cent stake in the bank.

There were media reports which said that RBI was pushing the bank to appoint an outsider as the CEO. The report also said that the RBI is studying whether the stakes held by Kotak Mahindra Bank in wholly-owned insurance subsidiaries carry any risks.  Media reports said the bank has engaged an executive search firm for finding the successor. Two of its internal candidates KVS Manian and Shanti Ekambaram are perceived to be 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.The bank’s share price has seen fluctuation since the time Uday Kotak announced his decision to step down. In his letter to shareholders, Kotak has expressed concerns about the impact of over-regulation. “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. 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.