Uday Kotak – Page 2 – IFSCCodeof.in

Uday Kotak, BFSI News, ET BFSI

May 27, 2021 root Banking & Finance

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NEW DELHI: The decision to relax partial lockdowns and restrictions imposed by various state governments to contain second wave of Covid-19 pandemic should be based on the advice of experts as the July-September period is going to be crucial for the nation, said CII President Uday Kotak.

As vaccination drive picks up in July-September and positive cases come down on account of current restrictions and partial lockdowns imposed by various state governments, the main challenge would be to take a decision on opening up the economy, he said.

“After vaccination picks up, what do we do? Do we open up or be cautious? So, that will be the trade-off which will be crucial between July and September in the race between vaccination going up, current positivity rate remaining low.

“But, the worry that if you open up too soon, we will get COVID 3.0 quickly and that is the trade-off for which we need to take a calibrated call, not today but in the second half of June,” Kotak told PTI.

The decision to open up should be taken on the advice of experts based on scientific evidence, he said adding that the July-September period needs to be handled with care.

“Let us get scientists and experts to do their analysis and then take the call based on expert advice. One of the challenges, I feel, we in India face is that many people take decisions without depending enough on expertise.

“I would rather depend on expertise and based on that, take the right decisions,” he said.

As per estimates, he said, by August, India should be produce about 15 crore vaccines per month, and there is a decent hope that post-September and October, India would be vaccinating a lot of people.

“What is really the issue is this 3-4 months hiatus which we have now is the challenge that we need to handle with care because post-COVID 2.0, most states have effectively curtailed economic activities,” he added.

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Uday Kotak wants RBI to expand balance-sheet as Covid intensifies, BFSI News, ET BFSI

May 4, 2021 root Banking & Finance

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Veteran banker Uday Kotak has called on the RBI to expand its balance sheet to mitigate the economic impact of the Covid wave.

Such an expansion is a serious option when the country is trying to save lives and livelihoods, said Kotak, the promoter and chief executive officer of Kotak Mahindra Bank.

“We have come to a time when we will have to be much more open to expand the balance sheet of the central bank and I think the RBI has given the signal through the G-SAP programme,” Kotak said,

The RBI had already lent its balance sheet by announcing a buy-back programme for government securities, however, more could be done given the circumstances.

He also asked companies to bear the cost of not sending employees out and said that there was a need to plan for a third wave.

“In spite of all efforts, the overall numbers continue to rise. The healthcare system and medical personnel are stretched to the limit and exhausted. Measures to break the chain of transmission are of paramount importance to mitigate human tragedy and loss of lives, alongside augmenting health infrastructure and medical supplies”, said Kotak.

The GSAP programme

Along with the OMOs and direct intervention in the secondary market, the government has announced G-SAP, a definite calendar for open market purchases of bonds. Under G-SAP, the RBI has committed to Rs 1 lakh crore bond buys this quarter and said it will buy more.

The RBI programme is a variant of the Quantitative Easing (QE) policy followed by central banks in advanced economies to tide over the global financial crisis of 2008.

Under QE, central banks conduct large-scale purchases of assets, including treasury bills and private sector bonds, to directly influence rates and risk premiums on private debt.

However, the RBI is committing to buy only government securities.

G-SAP provides certainty to bond investors that the RBI will step in to buy bonds, infuse liquidity and bring down yields.

Galvanising India Inc

Uday Kotak called on the industry to take voluntary measures to break the chain of transmission of the virus.

Reiterating ‘safeguarding lives’ as the highest collective national priority amidst the second wave of Covid that is ravaging India, Kotak urged the industry “to curtail all non-essential economic activity requiring physical presence of employees at the workplace, for the next two week.”

The industry should review operations and minimise the use of in-person manpower, limiting it to only critical operations or activities required by law, Kotak said.

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Will continue to be MD & CEO of bank till Dec 2023: Uday Kotak

May 3, 2021 root Banking & Finance

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Uday Kotak had sold 56 million shares held by him in the bank for at least Rs 6,913.75 crore through a block deal to reduce his stake to 26%.

Kotak Mahindra Bank’s MD and CEO Uday Kotak on Monday said he would be with the bank at least till his term ends. On his succession plans, Kotak said the bank’s board would act in a manner which is appropriate and responsible.

The comments from Kotak came after the Reserve Bank of India (RBI) issued guidelines that the MD and CEO of a private bank cannot have a tenure of more than 15 years. RBI had earlier approved the re-appointment of Uday Kotak as MD & CEO of Kotak Mahindra Bank for three years in December 2020.

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Uday Kotak, BFSI News, ET BFSI

May 3, 2021 root Banking & Finance

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Mumbai, May 3 () With the RBI capping top managements’ tenure at lenders, Kotak Mahindra Bank‘s head Uday Kotak on Monday said his current term as the managing director and chief executive is till December 2023 and the board will take a call on succession in due course. Kotak also stressed that the commitment to institution building has been a core value for the entity over the last 36 years of its existence.

The RBI last week capped MD and CEOs’ terms at private sector lenders at 15 years, from October 1 onwards, but has allowed the serving bank heads to complete their current appointments.

Uday Kotak, who is also among the promoters of the lender, has been at the helm for over 17 years already.

“The tenure for me is up to 31st December 2023. So, you are going to see me around as CEO at least till then,” Kotak told reporters at a virtual press conference.

He added that the board and the bank are fully committed to long-term stakeholder value and will do whatever is required to ensure stakeholder and shareholder value for the future.

“The commitment to institution building long term is the core to our values and we will take whatever (step) is necessary to maintain that,” Kotak said.

He added that the journey for the entity started in 1985 as a non-bank finance company with a capital of Rs 30 lakh.

To a question on succession planning, he hinted that the board does not have to wait till the RBI puts a cap, and added that in the current times of COVID-19, it is all the more necessary.

“Any financial institution or any company for that matter always plans for what happens if the senior leader gets run over by a bus. In today’s time, the risk of being affected by COVID is even higher. Therefore, succession planning has to be a continuous process which every institution constantly thinks about,” he noted.

The board will act in a manner which is appropriate and responsible, he added. AA ABM ABM.

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RBI’s CEO tenure cap: Here’s how it will impact Uday Kotak; HDFC Bank, ICICI Bank, Axis Bank safe

April 28, 2021 root Personal Finance

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Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over.

The Reserve Bank of India’s (RBI) final guidelines on the tenure of bank MD, CEOs, or Whole Time Director (WTD) will apply to private lenders, small finance banks (SFBs), and wholly-owned subsidiaries of foreign banks. Under the new guidelines, the post of MD and CEO of a private bank cannot be held by the same individual for more than 15 years in one go. While, in the case of a promoter MD/CEO, the tenure will be capped at 12 years. RBI has noted that under special circumstances and at the discretion of the apex bank, the term for promoter CEO may be extended up to 15 years. “Banks such as HDFC Bank, ICICI Bank, and IndusInd Bank had a change at the helm in the recent past. However, banks like Kotak Mahindra Bank, DCB Bank, City Union Bank, Federal Bank, and RBL Bank have long-running tenures (+10 yrs) of the current MDs,” said Siji Philip and Dnyanada Vaidya, research analysts, Axis Securities.

RBI guidelines negative for Kotak Mahindra Bank

For Kotak Mahindra Bank and City Union Bank, the term extension has already been done till 2024 and 2026, respectively. Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over. However, he will continue to remain a stakeholder in the bank. Uday Kotak got reappointed on January 1, 2021, for a period of three years. “Hence, his tenure will now end on 1 Jan 2024 and he is not eligible for reappointment as he has already completed 15 years as the MD and CEO,” said Suresh Ganapathy, analyst at Macquarie Research in a note.

Banks to comply with RBI guidelines by Oct 1, 2021

Ganapathy also said that the second in line Dipak Gupta (current Joint MD) may not be eligible to succeed Kotak as the CEO as the 15 year cap applies for all whole-time directors (WTD) on the board. RBI circular also stated that the upper age limit for MD and CEO and WTDs in the private sector banks would continue and no person can continue as MD and CEO or WTD beyond the age of 70 years. Banks are permitted to comply with these instructions latest by October 01, 2021. It should be noted that banks with MD and CEOs or WTDs who have already completed 12 or 15 years as MD and CEO or WTD, on the mentioned date these instructions coming to effect, shall be allowed to complete their current term as already approved by the Reserve Bank.

Kotak Mahindra Bank shares were trading nearly 3 per cent higher at Rs 1,799 apiece on BSE in intraday deals on Wednesday. So far, a total of 46,000 shares have traded on BSE, while a total of 19.40 lakh shares have exchanged hands on NSE. RBI also clarified that the individual will be eligible for re-appointment as MD and CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions. “During this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly,” RBI said.

HDFC Bank, ICICI Bank, Axis Bank seem fine

According to Ganapathy, the CEOs of HDFC Bank, ICICI Bank and Axis Bank have plenty of time and can be the CEO for more than a decade as they were appointed as the CEO recently. HDFC Bank CEO took charge last year whereas ICICI Bank CEO took charge a couple of years ago. Similarly, Axis CEO also can be the CEO for more than a decade.

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RBI’s new rule on tenure will promote younger lot at bank, BFSI News, ET BFSI

April 27, 2021 root Banking & Finance

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The Reserve Bank of India has put a cap on the maximum age of a bank CEO, paving the way for a younger lot to helm banks transitioning into digitalisation.

The Reserve Bank of India has fixed the tenure of MD, CEO and whole-time director (WTD) in a private sector bank at 15 years and prescribed the maximum age of 70 years for such functionaries.

This will lead to a change in succession planning at the banks.

The impact

Uday Kotak, the promoter MD and CEO, got reappointed on January 1, 2021, for three years. His tenure will end on January 1, 2024, and is not eligible for reappointment as he has already completed 15 years as the MD and CEO.

HDFC Bank, ICICI Bank, Axis Bank CEOs have had plenty of time and can be the CEO for more than a decade as they were appointed on the post recently.

IndusInd Bank CEO Sumant Kathpalia took charge last year and can continue at the helm of affairs for more than a decade

Kamakodi, CEO of City Union Bank, will complete his 15-year tenure in May 2026, which will be two years before his retirement.

In the case of Bandhan Bank, if the RBI considers the date of conversion to bank, which is five years ago, then C S Ghosh has a long time ahead.

The upper limit of 15 years for MD and CEOs may increase the scope for a few more years at the helm for banks like DCB, Federal and RBL.

The road ahead

The provision that individual will be eligible for reappointment as MD and CEO or whole-time director in the same bank after a minimum gap of three years, leaves an opportunity for the promoter-CEO to take the bank helm after a gap of three years

Experts say while the tenure cap benefits new age banks, which need a younger lot to steer them, the bank-promoter CEO enterprise would have an impact.

The new norms will also lead to bigger involvement of independent director and non-executive directors in the bank affairs and help in good governance and vigil. 0

The RBI directives

These directives form part of the instructions issued by the RBI with regard to the chair and meetings of the board, the composition of certain committees of the board, age, tenure and remuneration of directors, and appointment of the WTDs on Monday.

The RBI said it would come out with a Master Direction on Corporate Governance in banks in due course.

“Subject to the statutory approvals required from time to time, the post of the MD & CEO or WTD cannot be held by the same incumbent for more than 15 years.

“Thereafter, the individual will be eligible for re-appointment as MD & CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions,” the RBI said.

It added that during this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly.

With regard to the upper age limit for MD & CEO and WTDs in the private sector banks, the RBI said that no person can continue on such positions beyond the age of 70 years. The banks” boards, however, will be free to prescribe a lower retirement age for the WTDs, including the MD & CEO.

The maximum age limit for chairman and non-executive directors has been fixed at 75 years.

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Uday Kotak, BFSI News, ET BFSI

March 29, 2021 root Banking & Finance

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Uday Kotak, MD & CEO, Kotak Mahindra Bank, in conversation with Nikunj Dalmia of ET NOW at the Times Network India Economic Conclave 2021.

During the last India Economic Conclave (IEC), you had said that India needs banks but it needs few PSU banks, it needs adaptation of fintech and it needs consolidation in the sector. I guess you knew what was happening because that indeed is happening one year after our interaction?
I do believe that India has made very serious progress in this pandemic era and actually grasped the opportunity of what we need to do. Therefore the financial sector is in for a significant change. The government’s move of testing out with two public sector banks is first of its kind and this combined with the fact that over time you will have four or five large state owned banks and private sector banks and at the same time opening up competition in the sector is the right way to go. At the same time, we need to be clear that in the last one year, Covid has changed our lives in the field of technology and financial services by a multiplier of five. What would have otherwise taken us five years is happening in one year. That is what we are going to be ready for.During the course of 2020 every time we interacted with you on various forums your words were: “India Inc has been hit. It is like a ship which is now trapped in muddy waters.” Is the challenging time behind us? Has the ship reached the shore?
Covid has created a new category of what I call as haves and have nots. The people who have had access to capital are in the category of haves and that is primarily the organised sector or companies which have access to public markets as also private equity and the have nots are the ones who did not have access to capital. There is a very stark difference between the haves and the have nots, based on access to capital. Therefore, even if you are from a stressed sector, if you have access to capital you are in good shape. If you do not have access to capital, you are in a tougher position and that is the difference which we have seen happen in front of us. That is as a result of dramatic pouring of money and liquidity globally and in India as well. That has enabled equity capital to rescue most of the organised sector.

The broad commentary from India Inc is one of highest-ever margins, strongest demand visibility and high optimism. A year ago, there was fear, gloom and doom on the Street. How does one differentiate the kind of indications which we are getting from India Inc.? Are these permanent or are there spurts of demand like sugar rush?
One year ago we did not know what hit us, we had no idea of the contours of the Covid impact. Today one year later, we seem to understand the virus a little better though it continues to mutate. At the same time, there is greater optimism on the possibility of vaccination of a lot of our people though I think it is going to take a few months more for us to get to a more comfortable place.

At the same time, we have started being able to deal with this virus in terms of our lives, what we can do, what we cannot do. We have adapted our life to the new reality. All these are the pluses and that is one of the reasons why business and industry feels they are in a better place than what it was one year ago.

Having said that, things will need to be better handled on the virus and vaccination moving forward but we have to be careful of a mindset of complacency. The virus has not gone one year later. It is still around and we feel more comfortable with it. But the virus is mutating and therefore I will certainly be looking with optimism because we are seeing a changed world. But I keep my guard up. I would not lower my guard too soon and make this more a marathon rather than a sprint.

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Govt must think of many AIFs, rather than one bad bank: Kotak

January 27, 2021 root Banking & Finance

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Instead of setting up just a single bad bank, the Centre should consider floating multiple such outfits in the form of Alternate Infrastructure Funds, Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank, and President, Confederation of Indian Industry, said. The veteran banker also suggested the setting up of a development financial institution for infrastructure, while speaking at BusinessLine’s Countdown to Budget 2021 event on Wednesday.

“One of the suggestions we have made from the CII is rather than thinking about just one single bad bank, where you have a big challenge of clearing price, allow floatation of multiple bad banks in the form of Alternate Infrastructure Funds registered under SEBI. They should also be allowed to buy, in addition to securities, loans from banks and NBFCs balance-sheets and to be considered as part of the permitted activity for AIFs,” Kotak said while delivering the keynote address at the HDFC Bank powered conference themed ‘Unleashing the animal spirit in a pandemic hit economy’ .

‘Needed, a DFI’

He also suggested setting up of a development financial institutions.“The reason is if you look at NABARD, which has been a success in rural and agriculture, or SIDBI in the area of MSMEs, the time has come for a massive infra push for India’s growth transformation and through that creating a reverse demand for various other products and services. A DFI, with a creative way of funding that institution with long-term money, is something that may be appropriate,” he said.

Budget 2021-22, which is being presented amidst the Covid-19 pandemic, is not just about arithmetic but also about being a policy document that spells out a new future for the country, Kotak said.

“We are in the best of times, the worst of times…the pandemic is a once-in-a-hundred year event. For all the challenges it has created to lives and livelihood, it is also the best time for us to grasp the opportunity of a transforming world economy, Indian economy, and society,” Kotak said.

Five focus areas

He underlined five key focus areas that the Budget should focus on. These include infrastructure, healthcare, education, sustainability, and defence. Additionally, there is a need for a continued push in three areas of private investments, jobs and digitisation.

Finance Minister Nirmala Sitharaman, who will present the Budget on February 1, has promised a “never before” like Union Budget as the government looks to boost growth amidst the pandemic.

“I genuinely hope this Budget will live up to the expectation that it is a Budget like never before,” Kotak said.

He also called for a gradual normalisation of the fiscal deficit over a three-year period and recommended a stable tax and interest rate regime.

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