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Uday Kotak has resigned as the managing director and chief executive officer of Kotak Mahindra Bank, the bank said in a stock exchange filing on Saturday."Uday Kotak has ceased to be the Managing Director & CEO of the Bank, with effect from September 1, 2023 on account of his resignation considered at the Bank's Board meeting held today and has become a non-executive Director of the Bank," the filing said.
Joint managing director Dipak Gupta will be the chief executive until December 31, it said.
"Uday Kotak has ceased to be the Managing Director & CEO of the Bank, with effect from September 1, 2023 on account of his resignation considered at the Bank's Board meeting held today and has become a non-executive Director of the Bank," the filing said.
As reported by Mint earlier, according to RBI’s April 2021 guidelines on corporate governance in banks, promoters who are managing directors and chief executives or whole-time directors (WTDs) cannot continue for more than 12 years. But the tenure could be extended to 15 years at the discretion of RBI. “While examining the matter of re-appointment of such MD and CEOs or WTDs within the 12/15 years period, the level of progress and adherence to the milestones for dilution of promoters’ shareholding in the bank shall also be factored in by the Reserve Bank,” it said.
While RBI rules do not forbid a promoter CEO from being appointed as a director on the board once his term ends, it is unclear whether such an appointment goes against the spirit of the regulation.
However, the issue of promoter stake was Kotak's biggest worry all through the journey as a universal bank and the RBI didn't budge on the insistence to bring it down to 15 per cent for the longest time.
Investors loved the bank's consistent earnings growth and relatively cleaner books, and Kotak struggled to get his stake down to what the RBI was comfortable with.
He also attempted to do so with a complex instrument, which did not meet the regulatory muster, and finally, in an unprecedented move, the bank dragged RBI to the Bombay High Court over the issue.
Kotak won the first round with the RBI under newly appointed Governor Shaktikanta Das agreeing to allow promoters of KMB to hold a 26 per cent stake, which led to the withdrawal of the case.
However, the RBI's norms on leadership appointments at private sector banks -- reviewed after the Yes Bank debacle where Co-founder Rana Kapoor's workings led to catastrophic consequences -- led to Kotak's exit from the bank in an executive role.
The RBI capped the maximum tenure of a managing director and chief executive officer at 15 years, due to which Kotak was set to retire at the end of his term in December 2023, which has now been cut short.
Kotak announced that he will be a non-executive director on the bank's board, but also went public against the bureaucratic approach in financial sector regulations. The remarks in his last message to shareholders as the CEO is reported to have disappointed the RBI brass.
1985 – Kotak Mahindra Finance commences bill discounting business
1987 – Enters lease and hire purchase business
1990 – Launches auto finance division for passenger cars
1991 – Establishes investment banking
1995 – Launches KMCC, a joint venture with Goldman Sachs Group for investment banking
1996 – Launches Kotak Mahindra Primus Ltd. Kotak Mahindra takes significant stake in Ford Credit Kotak Mahindra Ltd to finance Ford vehicles
1998 – Launches India’s first gilt fund through Kotak Mahindra Asset Management Company
2001 – Launches Kotak Mahindra Old Mutual Life Insurance in partnership with Old Mutual Plc
2003 – Kotak Mahindra Finance gets converted into commercial bank Kotak Mahindra Bank
2004 – Kotak Mahindra group enters alternate assets business, launches private equity fund
2005 – Kotak Alternate Assets launches real estate fund
2006 – Buys out Goldman Sachs’ equity in KMCC and Kotak Securities
2008 – Opens representative office of Kotak Mahindra Bank in Dubai
2009 – Launches pension fund under India’s National Pension System (NPS)
2014 – Acquires 15% equity stake in Multi Commodity Exchange of India (MCX)
2015 – RBI approves merger of ING Vysya Bank with Kotak Mahindra Bank
2016 – Acquires 1 million equity shares of Institutional Investor Advisory Services India Ltd
2017 – Kotak Mahindra Bank unveils 811 account; acquires BSS Microfinance Pvt Ltd
2018 – Buys out 26% Old Mutual Plc UK stake in Kotak Mahindra Old Mutual Life Insurance
2019 – Kotak Mahindra Bank launches first international branch in Dubai
2020 – Kotak Mahindra Bank raises ₹7,400 crore through a qualified institutional placement of shares
2021 – Kotak Mahindra group acquires vehicle financing portfolio of Volkswagen Finance
2022 – The bank acquires DLL India’s agri and healthcare equipment financing portfolio
2023 – Kotak Mahindra Bank announces acquisition of microfinance company Sonata Finance
Source: Kotak Mahindra Bank website
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