In a completely unexpected move, Uday Kotak, MD & CEO of Kotak Mahindra Bank, stepped down on September 2, 2023. Tendering his resignation to the bank’s chairman in a handwritten letter, he said, “I have mulled over this decision for some time and believe this is the right thing for the institution”.

Kotak’s resignation from the bank, effective September 1, 2023, is four months ahead of his tenure, said to end on December 31, 2023.

As an interim arrangement, Dipak Gupta, presently serving as the joint managing director of the bank, is said to be appointed as the MD & CEO of the bank till December 31, 2023, subject to approval from the Reserve Bank of India. Incidentally, Gupta’s tenure at the bank will also end on December 31, 2023, coinciding with Kotak’s tenure.

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The bank has sent two names to the RBI as contenders for the CEO position, according to Uday Kotak’s statement to a television channel. However, it is unclear whether both are internal candidates or an external hand has also been included in the list. Going by market buzz, KVS Manian , President, Corporate, Institutional and Investment Banking, and Shanti
Ekambaram , President, Consumer Banking, are said to be the preferred internal choices to succeed Kotak.

Members of the banking fraternity say they are ‘surprised’ with Kotak’s decision to step down four months ahead of the tenure. “None of us saw it coming,” said a CEO of a private bank.

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While the exact reason and timing of his early exit is not known, in the letter to the bank’s chairman, Kotak cited that he would be significantly occupied with some personal and family commitments. “My elder son’s marriage functions are being planned. Consequently, considering the proximity of these events to the end of my tenure, I thought it appropriate to hand over the baton and stagger the transition”.

Interestingly, Kotak Mahindra Bank is believed to be among the bidders for IDBI Bank. On Friday evening, the Department of Investment and Public Asset Management (DIPAM) .

Continuing association

While Uday Kotak ceases to be the MD & CEO, he will continue associating with the bank as its non-executive director, starting immediately. In April this year, the board approved his appointment as non-independent non-executive director once his term ended in December and ratified by ‘an overwhelming majority of the shareholders of the bank’, according to Kotak’s letter. In his personal capacity, Uday Kotak holds a 25.72 per cent stake in Kotak Mahindra Bank, making him the bank’s single largest shareholder. Along with family members and associated entities, the promoter holds a 25.93 per cent stake per the latest stock exchange filing.

“I stand in a lonely place of being the founder, promoter and significant shareholder of this great institution,” Kotak said, recounting his 38-year-long history in building the bank and getting it to its present position. At Rs 4.89 lakh crore of balance sheet as of March 31, 2023, Kotak Mahindra Bank is the fourth largest private bank.