Kotak Mahindra Bank on Monday said it has not received any communication from the Reserve Bank of India (RBI) on the succession plan for its chief executive officer. “We would like to state that there is no communication, formal or informal, from the RBI to Kotak Mahindra Bank or its board members on CEO succession,” the bank said in a press release.
It holds all the regulatory approvals, including that from the RBI, for its stake in insurance subsidiaries, and has not received any formal or informal communication to the contrary, the bank added.
The clarification comes after a Bloomberg report earlier in the day said the banking regulator is nudging the private lender to select someone outside its ranks to succeed current chief executive officer Uday Kotak. The news report also said the RBI is reviewing whether stakes that the banking group holds in the insurance units pose any risk to its stability.
Kotak will be retiring as the chief executive officer of the bank on December 31, 2023 and assume the role of a non-executive director. The last date for the bank to submit recommendations on a successor is August 31. Kotak Mahindra Bank is expected to suggest at least three names – two internal candidates and one external – in that order of preference, from which the RBI will approve one for appointment.
In a recent report, brokerage firm Jefferies noted that KVS Manian or Shanti Ekambaram, both executive directors, would be preferred for the top job. “Smooth succession will be the key for the bank’s premium multiple to sustain. Increased possibility of an external CEO may be a tad negative as it would increase the uncertainty around management changes,” the report said.