The three top professionals—Dipak Gupta, Shanti Ekambaram, and K.V.S. Manian—are in the running to succeed Uday Kotak next January.
Uday Kotak, the founder of Kotak Mahindra Bank, has already initiated the process of appointing a new MD & CEO by immediately transitioning to a non-executive director role.
The board has named Dipak Gupta, the most senior professional, as the interim MD & CEO, for a three-month period until December this year. Kotak's term as MD&CEO was supposed to end in December.
Starting in January 2012, Gupta took on the role of Joint Managing Director. He has been a No 2 for over a decade. With a career spanning over three decades in the financial sector, he has spent nearly two and a half decades at Kotak Bank.
The bank has already partnered with Egon Zehnder, an international search firm, to assist in identifying the most qualified candidate for the role. There are two whole-time directors-Shanti Ekambaram and K.V.S. Manian-who are also contenders for the top job. Sources suggest that it is highly unlikely that Kotak group will go for an outsider for the top job.
Uday Kotak is taking charge as a non-executive director for a period of five years. In fact, Kotak will be there to guide the bank by being part of the board.
Kotak founded Kotak Mahindra Bank, originally known as Kotak Mahindra Finance, and has served as its MD&CEO since August 1, 2002. Over the past four decades, he has been instrumental in the bank's growth.
Under his guidance, the Kotak Group has expanded its footprint across various financial services, including stock broking, investment banking, car financing, life insurance, and mutual funds.
In his letter to shareholders last month, Kotak said, "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. It is unusual in today’s world of banking anywhere to have an individual with 26 per cent skin in the game with disproportionate family assets in one stock, emotionally attached to living his dream of making India proud."
Kotak Bank's biggest challenge would be to retain its key talent after the succession.
When Chanda Kochhar succeeded K V Kamath as the head of ICICI Bank, the country's second-largest private-sector bank saw the departure of senior leaders. Shikha Sharma, who was also a contender, moved to Axis Bank. Sonjoy Chatterjee moved to Goldman Sachs. Renuka Ramnath of ICICI Ventures left to launch her own private equity venture, successfully building a new business from the ground up. V Vaidyanathan, although he stayed for a while, eventually left to become an entrepreneur and is now leading IDFC First Bank as its MD & CEO.
In the case of HDFC Bank, Paresh Sukthankar, who was considered the likely successor to Aditya Puri, unexpectedly stepped down in August 2018. At the time, he was already serving as the bank's Deputy MD. Ultimately, Sashidhar Jagdishan, an internal candidate, was chosen as the most fitting person for the top position.
For IndusInd Bank, Suman Kathpalia, who led consumer banking, was the unanimous choice to succeed Romesh Sobti, the man credited with turning around the bank. But this mid-sized private bank also saw senior executives leave the bank.
Uday Kotak’s son, Jay Kotak, is expected to follow the normal career path. Jay Kotak serves as the Vice President of Kotak811, the digital platform of the bank. In an interview after the bank’s June quarter earnings, Gupta clarified that family members are not natural successors at banks, and Uday’s son Jay will follow the normal career path.