CEO cap to hurt Kotak Bank most

RBI said on Friday that 10 years were adequate time for a promoter, or a major shareholder of a bank, as WTD or CEO, to stabilise its operations and transition the leadership to a professional management.

The Reserve Bank of India (RBI) discussion paper, which restricts the term of whole-time directors (WTD) and chief executives to 10-15 years, will affect Kotak Mahindra Bank the most, experts said.

Kotak Bank may be affected more among leading private banks as Uday Kotak has held the post of CEO since inception, said a Jefferies note. (Aniruddha Chowdhury/Mint file photo)

RBI said on Friday that 10 years were adequate time for a promoter, or a major shareholder of a bank, as WTD or CEO, to stabilise its operations and transition the leadership to a professional management.

Kotak Bank may be affected more among leading private banks as Uday Kotak has held the post of CEO since inception, said a Jefferies note. Kotak’s current term expires in December 2020. “So, if the norms are implemented as is, and notified by September 2020, his term may expire in September 2022 or April 2023 and, Dipak Gupta, who is the joint managing director at present, could be a prospective internal successor,” said Jefferies. The bank will have to undergo a CEO transition if the discussion paper is finalised in the current format, Morgan Stanley analysts said.