On September 2, Kotak Mahindra Bank informed the stock exchanges that Uday Kotak, the managing director and CEO, has resigned from the role ahead of his term coming to an end by the end of this year.
Kotak has been heading the bank since its inception and has grown the company to a leading financial institution in the country from scratch. Kotak along with relatives and enterprises in which he has beneficial interest holds 25.95 percent of the equity share capital of the bank and 17.26 percent of the paid-up share capital of Kotak Mahindra Bank Limited as on March 31, 2023.
Till a new CEO comes on board, the current joint managing director Dipak Gupta will carry out the duties of the chief executive officer subject to approvals from the Reserve Bank of India (RBI), the bank said.
Here's all you want to know about Uday Kotak's successor in the interim.
Gupta is currently the second most top executive at Kotak Mahindra Bank after Uday Kotak. Gupta, who wears a lot of hats at the bank as head of IT, cyber security, customer experience and business intelligence, currently serves as the joint managing director.
An old Kotak hand
In fact, Gupta’s association with Kotak dates back to 1999 when he joined as an executive director of Kotak Mahindra Finance Ltd (KMFL) and has played a key role in building the retail business of the bank even before Kotak got the banking licence in 2003.
Prior to joining Kotak Group in 1992, Gupta worked with the consultancy division of AF Ferguson. Over the years, Gupta has played a key role in building various businesses for the Kotak Group.
Gupta was instrumental in forging the partnership between KMFL which got the banking licence in April 2003 to become Kotak Mahindra Bank Limited and Ford Credit International. Also, Gupta was the first CEO of Kotak Mahindra Primus Limited, the KMFL–Ford Credit joint venture.
Gupta, who has a BE (Electronics), PGDM-Indian Institute of Management, Ahmedabad, helms functions of Internal Audit and Information Technology including Cyber Security and Digital Initiatives, at the bank.
Challenges ahead
As the bank is in the midst of its biggest leadership change, Gupta will have to navigate the institution in the absence of Kotak at the helm, till a new CEO joins.
Within the business verticals, there are concerns among analysts around the growth in the unsecured loan book that has grown sharply of late.
Kotak Mahindra recorded an increase in unsecured retail loans during the April-June quarter, when compared with the year-ago period, with credit card outstanding and microfinance loans surging aggressively.
Retail unsecured loans of Kotak Mahindra Bank reached 10.7 percent of the total loan book as at the end of June 2023 from 7.9 percent a year back, according to an investor presentation by the private sector lender.
Retail microfinance loans surged 91 percent over last year, while credit card outstanding jumped 67 percent.
Retail microloans are given to low-income groups who are typically small businessmen and vendors. These loans are a tricky segment for banks as cash flows typically take a hit during a down cycle.
Gupta, however, has downplayed the concerns on retail unsecured loans. Yet, the challenges persist.
Gupta will need to also assure investors and depositors of smooth handling of the bank till the leadership transition is complete. Uday Kotak has been heading the organisation since its inception and there is no clarity yet about the new CEO yet. Gupta, however, is no stranger to challenges.
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