The bank’s board has already submitted its recommendations to the Reserve Bank of India (RBI) regarding Kotak’s successor. While the chosen candidate has not been disclosed, regulatory approval for this appointment is pending, and no specific timeline has been provided.
India has tightened rules limiting bank CEOs’ tenure to a maximum of 15 years and has been reviewing the stakes that banks hold in insurers in order to strengthen the nation’s financial system. RBI in 2021 said that the outgoing head should take a three-year cooling period and shall not be “appointed or associated with the bank or its group entities in any capacity, either directly or indirectly,” to ensure there is a clean break for the outgoing head from the bank.
In a handwritten letter addressed to the bank’s chairman, Prakash Apte, Uday Kotak stated, “I have mulled over this decision for some time and believe this is the right thing for the institution.” He further explained that his resignation would occur after the completion of the financial year and the Annual General Meeting (AGM) for FY2023, strategically considering the transition and stability aspects.
Uday Kotak is widely recognized for his remarkable achievement of building a financial powerhouse, starting from scratch in 1985. What initially began as a bill discounting company evolved over the years to encompass securities trading, investment banking, lending, mutual funds, and insurance. Throughout this journey, Kotak collaborated with global giants such as Goldman Sachs to assimilate the highest international standards while steadfastly retaining control within the company.Reflecting on this transformative journey, Kotak remarked, “It has been 38 long years since this institution was created with three employees in Fort Mumbai. It is now a preeminent bank and financial conglomerate having presence across India and in five other countries with over 100,000 employees. I have cherished being a part of this entire journey. It is now time to move on.”Besides personal projects, Uday Kotak cited upcoming family commitments as a significant reason for his early departure. “Over the next few months, I am going to be significantly occupied with some personal and family commitments,” he explained. “My eldest son’s marriage functions are being planned. Consequently, considering the proximity of the events to the end of my tenure, I thought it appropriate to hand over the baton and stagger the transition.”Uday Kotak’s leadership has seen Kotak Mahindra Bank navigate through multiple financial challenges over the decades, including the Harshad Mehta stock market scandal, the CRB financial crisis of the mid-90s, the Ketan Parekh scam during the tech bubble burst, and the post-Lehman Brothers meltdown. In a noteworthy moment, the government sought Kotak’s expertise to resolve the aftermath of the Infrastructure Leasing & Financial Services (IL&FS) collapse, one of the largest bankruptcies in India.
Kotak, known for his conservative approach that prioritizes safety over rapid expansion, has diligently preserved his stake in the bank he founded and nurtured. Despite regulatory pressures, including the reduction of promoter stake from 30% to 15%, Kotak Mahindra Bank remained resilient. Eventually, the RBI allowed promoters to hold up to 26% in a bank.
Notably, in 2021, the RBI introduced rules imposing a maximum tenure of 15 years for CEOs in Indian banks, leading to significant changes in senior executive roles. Uday Kotak remains confident that the institution he built could follow in the footsteps of global banking giants like JPMorgan, bearing his family’s name and brand.