The high-profile banker’s decision to become a non-executive director came as a surprise. The bank has recommended two candidates for CEO to the RBI and until the regulator approves the name, the board has appointed joint MD Dipak Gupta as interim MD & CEO.
Kotak told TOI that the intent of stepping down early was to get more personal time for his son’s marriage at the end of the year coupled with the need to sequence the exits of the MD, joint MD and chairman who will complete their terms at the end of the year.
The exit of the top management was triggered by a change in RBI rules in 2021 that capped the maximum term for bank CEOs at 15 years and whole-time directors at 10 years.
In the past, changes in shareholding norms and regulations had enabled Kotak to hold over 25% in the bank. Many in banking speculated that Kotak might stay on as CEO beyond 2023 but the central bank appears to have taken a firm stand.
“Succession at Kotak Mahindra Bank has been foremost on my mind since our chairman, myself and joint MD are all required to step down by year-end. I am keen to ensure a smooth transition by sequencing these departures. I initiate this process now and step down voluntarily as CEO,” Kotak announced on a microblogging platform and also posted a two-page handwritten letter addressed to the bank’s chairman, Prakash Apte.
“I stand in a lonely place of being a founder, promoter and significant shareholder of this great institution. It also bears our family name and carries that as its brand. The institution we have built together stands for purpose, trust and integrity. I am committed as a stakeholder to see this institution sustain and grow,” said Kotak in his resignation letter.
In his post, Kotak reiterated his ambition of building a legacy institution that carries his name. “A long time ago, I saw names like JP Morgan and Goldman Sachs dominate the financial world and dreamed of creating such an institution in India. It is with this dream that I started Kotak Mahindra 38 years ago, with 3 employees in a 300 sqft office in Fort, Mumbai,” he said.
In his letter to shareholders in July, Kotak had said that while historically the bank had promoted internal talent, it was now willing to look outside. He said that the bank has made top-level appointments from outside, including a new chief technology officer, chief of customer experience, head of brand, product and marketing and chief of retail and commercial risk. In his letter, Kotak also called for the need to nurture entrepreneurship and guard against financial services’ bureaucratisation.
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