Kotak bank denies receiving RBI communication on CEO

livemint.com:

Bloomberg reported that RBI is “nudging Kotak Mahindra Bank Ltd to select someone outside the lenders’ ranks to succeed Uday Kotak as the next chief executive officer". The report also said that RBI has conveyed its view to board members of Kotak Mahindra Bank. It said that “RBI is also reviewing whether stakes the banking group holds in two wholly-owned insurance units pose any risks to the firm’s stability".

The bank clarified that it “holds all regulatory approvals including from RBI for its stake in its insurance subsidiaries and has not received any formal or informal communication to the contrary". The private sector lender has appointed consulting firm Egon Zehnder to lead a global search to select a successor to Kotak once he steps down as managing director and chief executive officer by December end. Shanti Ekambaram and K.V.S.

Manian are the two internal candidates in the race for the job. RBI has the final say on the appointment of managing director and chief executives from the names shortlisted by banks. Kotak has received shareholders’ approval to be reappointed on the board as a non-executive director after his retirement.

In April, Mint had reported that Kotak’s reappointment was being examined by the RBI to see if it goes against the spirit of the guidelines on corporate governance. According to RBI’s April 2021 guidelines, the tenure of a promoter CEO is capped at 12 years and the individual should take a three-year cooling period before being reappointment as MD and CEO or wholetime director. However, Kotak’s case is different as appointment of non-executive directors on a bank’s boards does not require RBI’s approval.