The Reserve Bank of India (RBI) has approved the re-appointment of Uday Kotak as the managing director of Kotak Mahindra Bank for three years.

The banking sector regulator also approved the appointment of part-time chairman Prakash Apte for three years.

“The RBI has vide its letter dated December 14 2020, granted approval for the re-appointments of Prakash Apte as part-time chairman; Uday Kotak as MD & CEO; and Dipak Gupta as Joint MD for a period of three years, with effect from January 1, 2021,” the bank said in a communication to the stock exchanges.

Earlier, the board of the bank and its shareholders had approved these re-appointments, subject to the approval of the RBI, at their respective meetings held on May 13 and August 18.

Apte was appointed as the part-time chairman at the annual general meeting held on July 19, 2018, for a period from July 20, 2018, till December 31, 2020

Kotak is the founder managing director and promoter of the bank. There was uncertainty on his continuation as the managing director in June after a discussion paper from the RBI proposed that the tenure of the whole-time director or CEO of a bank, who is a promoter or major shareholder, should not be more than 10 years.

The discussion paper further said it would allow banks up to the end of their founder CEO’s current tenure to find a new head or two years from the time the new guidelines are implemented, whichever is later.

Brokerages feared Kotak Mahindra Bank would be the most impacted of the all the banks since Uday Kotak has been leading the private sector lender for the past 17 years.

“Among the leading private banks, we believe Kotak Bank may be affected more as Uday Kotak is the promoter and the CEO/MD. He has been CEO/MD since inception and his current term expires in December 2020. So, if the norms are implemented (and notified by September 2020) then his term may expire on September 2022 or April 2023,” a note from Jefferies had said.

However, the recommendations of the discussion paper is yet to be accepted by the RBI.

While the announcement was made after market hours late on Monday, the shares of Kotak Mahindra Bank on Tuesday hit a new 52 week high on the news. The scrip touched an intra-day high of Rs 1,958 after which it settled at Rs 1,950.45 — a gain of 0.53 per cent over the last close.