on Sep 03, 2023)Uday Kotak, who in 1985 founded Kotak Mahindra Finance, a finance company that transformed into Kotak Bank with a Rs 3.5 lakh crore marketcap, has stepped down as MD & CEO. In an interview with TOI’s Mayur Shetty, Kotak sought to explain why exiting four months before the end of his tenure in Dec 2023 should not come as a surprise. Excerpts from the interview:
Your resignation has come as a surprise. Why did you step down ahead of tenure?I wanted to do the right thing for the institution. The timeline for the departure of the chairman, managing director, and joint managing director was set for December 31. Given this transition phase, we felt a sequenced approach would be best for the institution’s stability. I wanted to leave after fulfilling my responsibilities, which included the approval of the financial accounts for FY23 at the AGM on August 19. Additionally, I have personal and family commitments… my son’s wedding is in November. Considering the proximity of these events to the end of my tenure, it was appropriate to hand over the baton now. This is the reason, there is no other surprise. Finally, the institution is more important than any individual.What about succession?
The bank has already submitted a succession application to the RBI for both the chairman and MD positions. The board has appointed Dipak Gupta as the CEO for a four-month period, pending RBI approval, and I have transitioned from MD to non-executive director.
You could have continued till December.
There is logic to what we have done. Sequencing the transitions was essential to prevent all three key figures from departing simultaneously. I chose to step down first to fulfill my responsibility. Moreover, a few months in a 38-year career are relatively short. We began with three employees in a 300-square-foot office in Fort (Mumbai), and it has been a remarkable journey that I cherish. I don’t wish to keep on hankering for the seat.
Will this not come as a shock for the markets?
Market participants were already aware that I would be stepping down in December, so this development should not be a surprise. The key is that we have sequenced the transition, removing one uncertainty, and the institution will continue to move forward. As a non-executive director and a significant shareholder, I remain committed to the investors and the markets.
Could you not have waited until RBI approved the next MD?
Waiting until RBI approval would have brought us close to December, and my family commitments are also a factor. This timeframe allows for a smoother transition, with Dipak Gupta, a longtime colleague, stepping in as managing director and CEO.
Does this give rise to uncertainty until the new CEO is approved by RBI?
There is no new uncertainty. The bank has completed all necessary actions. We have submitted applications for the CEO and chairman positions, and the financial accounts have been approved at the annual general meeting. There are no pending actions from the bank’s side.
Is the candidate proposed by the bank internal or external?
We have submitted an application with the names of two candidates in order of priority. The decision now rests with the RBI. These applications were submitted well in advance.
You have more ‘skin in the game’ than any other banker in the country, with all your wealth in the bank. How will you take care of it?
I have full confidence in the management team and the institution itself. That does not change, whether it is September or December. As a shareholder, I am deeply committed to the bank’s well-being.
You have always expressed a desire to leave a legacy at Kotak Bank. Many expected you to expand further through an acquisition.
Indeed, leaving a legacy is important to me, but the core ethos I wish to leave behind is that the institution is more important than the individual. As for the bank’s aspirations, there is a board, shareholders, and management to decide what is right.
What are your plans for the future?
I believe in the saying, “que sera sera,” which means whatever will be, will be. I can assure you that there is no fixed plan at this time.
Did you outline a plan when the new rules capping CEO tenure were announced in April 2021?
We adhered to the regulator’s requirements and made decisions in the best interest of the institution. My commitment has always been to prioritise the institution over any individual.
Is there any unfinished agenda?
The unfinished agenda is my desire to see India become one of the most powerful nations, and Kotak Mahindra Bank does its own little bit in shaping the country’s destiny.
How will you continue to be associated with the bank?
I have been appointed as a non-executive director, and I will continue to be associated in this role.
