Uday Kotak’s successor at KMB unlikely to face major challenges, say experts

The top candidates in the race for the successor include interim CEO Gupta, Shanti Ekambaram, president, consumer banking, and KVS Manian, president, corporate, institutional and investment banking.

Uday Kotak’s resignation, four months ahead of his tenure coming to end, is unlikely to pose any major challenge to his successor as Kotak Mahindra Bank is an established name in the banking sector, experts said.

“Take the example of Aditya Puri. The former chief of HDFC Bank took the bank to newer heights. After the end of his tenure, HDFC Bank is amongst the top banks in the country. Similar is the case with Kotak Bank and Uday Kotak. The bank will be amongst the top players in the segment,” said Chandan Sinha, former executive director (ED), Reserve Bank of India (RBI).

Also read: Who will take Uday Kotak’s job?

Kotak, one of the most celebrated bankers in the Indian banking sector, stepped down as the managing director and chief executive officer (MD and CEO) of the bank he founded on September 1. Kotak comes with a legacy of more than 35 years in the financial sector and around 20 years in Kotak Mahindra Bank.

Rajnish Kumar, former chairman, State Bank of India (SBI), highlighted that it will take some time for the new successor to have a significant influence on the bank.

“The bank has been built by Uday Kotak. There are processes in the selection process and though there are no major challenges, to have an impact will be tough in the starting days for the new chief,” Kumar said.

Kotak, along with his relatives and enterprises in which he has beneficial interest, held 25.95 percent of the equity share capital and 17.26 percent of the paid-up share capital of Kotak Mahindra Bank as on March 31, 2023. Though Kotak is exiting from his role as the chief of the bank, he will hold the post of non-executive director. Kotak’s term as non-executive director would be for five years.

Uday Kotak’s journey

The 64-year old banker started in the financial sector in 1985 with a non-banking financial company (NBFC) and three employees in an office in the Fort area of Mumbai.

“A long time ago, I saw names like JPMorgan 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 three employees in a 300 sq ft office in Fort, Mumbai. I have deeply cherished every bit of this memorable journey, living my dream," Kotak said in an address on social media.

An executive of the bank, who did not wish to be named, said that during Uday Kotak's tenure, the bank had an entrepreneurial environment.

"Kotak constantly encourages the entrepreneurial spirit in the bank. He motivated employees to work with that spirit," the executive said.

Also read: Uday Kotak resigns as Kotak Mahindra Bank MD & CEO, Dipak Gupta takes interim charge

The hunt for the new MD and CEO is on and till a new CEO comes on board, the current joint MD Dipak Gupta will carry out the duties subject to approvals from the RBI, the bank said in an exchange notification on September 2.

Gupta has been associated with Kotak from 1999 when he joined as an executive director in the then-NBFC, Kotak Mahindra Finance Ltd (KMFL). Over time, he has played a key role in building the retail business of the bank even before it got the banking licence in 2003.

KMFL in 2003 turned into a bank and is now the fourth largest private sector bank in the country with total assets under management (AUM) of Rs 5.12 lakh crore (as of June 2023).

Search for the successor

Kotak Mahindra Bank has shortlisted two names as possible successors to Kotak’s successor.

Also read: Banking Central | Why Uday Kotak's era is far from over at Kotak Mahindra Bank

“We have sent two names for the MD and CEO role to RBI in order of priority," Uday Kotak told CNBC-TV18, without disclosing if they of internal candidates or a not.

The top candidates in the race for the successor include interim CEO Gupta, Shanti Ekambaram, president, consumer banking, and KVS Manian, president, corporate, institutional and investment banking.

On Kotak's role as the non-executive director of the bank, a banking analyst who did not wish to be named said that he will have influence in the decision-making process in his new role as he was the founder and CEO of the bank, an uncommon thing in the banking business.

“Uday Kotak is the founder of the bank. He would have a voice in some of the decisions of the bank,” the analyst said.