Uday Kotak’s letter to KMB shareholders ruffles regulator
MUMBAI : Billionaire banker Uday Kotak’s recent letter to Kotak Mahindra Bank (KMB) Ltd’s shareholders has displeased the Reserve Bank of India (RBI), which thinks the letter’s reference to “Arjuna’s eye" and other such mentions are a veiled criticism of the central bank governor Shaktikanta Das, a person aware of the matter said. Kotak, in his last shareholder letter as managing director of KMB before stepping down at the end of this year, expressed concerns about the impact of over-regulation on the entrepreneurial spirit of financial sector companies. “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," he said.
While we need ‘Arjuna’s eye’ on risk management, we must prevent bureaucratization of financial services, he added. This disagreement is not the first instance of conflict between Uday Kotak and RBI. Kotak was embroiled in a protracted dispute with the central bank regarding his personal stake in the private lender.
The bank challenged an RBI directive requiring a reduction of promoter ownership in banks to 15% in a Mumbai court. Eventually, RBI settled with the lender, permitting Kotak to retain a 26% stake. Emails sent to spokespeople for RBI and KMB remained unanswered.
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