Kotak to take non-executive role after leaving MD post in December

In his final letter to shareholders as managing director on Saturday, Kotak said that the alignment and commitment of the shareholders, board and management will help the bank navigate the changing times.

“I see my role as a non-executive board governance member and a strategic shareholder with a long-term perspective of nurturing a world-class institution,” Kotak said in his letter.

He said it is unusual in today’s world of banking anywhere to have an individual with “about 26% skin in the game with disproportionate family assets in one stock, emotionally attached to living his dream of making India proud”.

Kotak’s tenure at Kotak Mahindra Bank is set to end in December after the Reserve Bank of India capped the tenure of bank chiefs to 15 years and to 12 years in the case of promoter chief executives. To be sure, beyond his role at the bank, Kotak was involved in the debt crisis resolution of Infrastructure Leasing & Financial Services Ltd (IL&FS) and had led the markets regulator Securities and Exchange Board of India’s (Sebi’s) committee on corporate governance in 2017.

The bank has hired Egon Zehnder to lead a global search for a chief executive officer to replace its founder. The bank’s corporate banking head K.V.S. Manian and retail banking head Shanti Ekambaram are considered to be in the race for the top job.

In the letter, Kotak recounted that he had started from scratch in 1985 with very little capital, three people and a 300 sq. ft office.

“We were at the right place at the right time. We are a quintessential product of the India growth story and the financial sector evolution,” he said. “We have created value for stakeholders and now provide 100,000 direct jobs and a multiple of that in indirect jobs.”

Kotak, however, cautioned against the bureaucratization of financial services in India. He also sought the unshackling of the financial sector in a nuanced manner towards optimum regulation.

“I feel the financial sector players risk becoming more robotic, curbing the entrepreneurial flair since the fear of making a mistake overrides the joy of creation and development. While we need ‘Arjuna’s eye’ on risk management, we must prevent bureaucratization of financial services,” he said.

According to the annual report, Kotak opted to forgo his fixed salary and accept a token salary of ₹1 for the fiscal year 2023. Dipak Gupta, joint managing director, got an annual compensation of ₹5.43 crore, and other whole-time directors Manian, Gaurang Shah and Shanti Ekambaram got total packages of ₹5.3 crore, ₹5.03 crore and ₹2.02 crore, respectively. These amounts exclude gratuity, the value of car perquisites under the Income Tax Act, 1961, and perquisites value on employee stock ownership plans (Esops), according to the report.

Updated: 17 Jul 2023, 12:47 AM IST