Uday Kotak is wanting for the market’s support

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Uday Kotak wants to be on his bank’s board once he steps down as CEO. India’s regulator will weigh if an insider succeeds him. A cosy arrangement may be tolerable but Kotak Mahindra’s stock is working against him, says ShritamaBose

. While promoting family members is common in India’s tycoon-run conglomerates, it is rare for a bank. What’s more, the stock has underperformed the benchmark Nifty Bank Index by nine percentage points since an April vote where 99% of shareholders supported Kotak continuing as a non-executive director. There may be multiple reasons for the lag but it makes the RBI’s decision tougher.

In the past, the regulator has booted out private bank chiefs for poor management of bad loans and overhauled a bankwhere it perceived succession planning was poor. It could back an external successor for Kotak as a measure of caution. Yet few of the industry’s elite see a problem with such a safe pair of hands sticking around.

. Whatever regulators decide for Uday Kotak and his bank, having the market onside will be helpful all around.The Reserve Bank of India is nudging Kotak Mahindra Bank to select someone outside the lender to succeed billionaire founder Uday Kotak as the next CEO, Bloomberg reported on July 31, citing unnamed sources. Kotak’s term ends on December 31.

In a statement issued on the same day, the bank said there has been no communication, formal or informal, from RBI to Kotak Mahindra Bank or its board members on the matter of succession.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

 

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