Uday Kotak, the founder of Kotak Mahindra Bank, has resigned as its managing director and CEO with effect from September 1, four months ahead of his retirement on December 31.

Dipak Gupta, joint managing director, has now been appointed as the interim managing director and CEO till December 31, when a new CEO will be appointed at the bank.

Kotak Mahindra Bank is now engaged in the process of finding a successor to Uday Kotak. Gupta’s term and that of Prakash Apte, chairman, will also end on December 31, 2023.

Directors K.V.S. Manian and Shanti Ekambaram are the frontrunners to succeed Kotak for the corner office.

Speaking to news channel CNBC TV-18 after his resignation, Kotak said that the lender has already sent two names “in order of priority’’ to the RBI. He did not disclose whether they were internal candidates.

In July there was a media report which said the banking regulator is keen on the private sector lender appointing a new CEO outside its ranks. This was denied by Kotak Mahindra Bank.

Kotak began his journey in the country’s financial services sector in 1985 by setting up a non-banking finance company called Kotak Mahindra Finance Ltd (KMFL).

In 2003, KMFL got a banking licence from the Reserve Bank of India (RBI) and was converted into a bank, thus becoming the country’s first NBFC to attain this feat. Kotak has been the entity’s CEO since 2002 and, therefore, is one of the bankers in the country to hold such a long stint.

In a tweet on the micro-blogging site X (formerly Twitter), Kotak said, “I am keen to ensure smooth transition by sequencing these departures. I initiate this process now and step down voluntarily as CEO. The bank awaits RBI approval of the proposed successor. In the interim my dear colleague Dipak Gupta —currently Joint MD — will function as MD and CEO, subject to approvals.”

Pointing out that succession at Kotak Mahindra Bank, which currently has a market capitalisation of Rs 3,52,031.52 crore, has been “foremost’’ on his mind since apart from him, the lender’s chairman, and the joint MD are all required to step down by the year-end, Kotak said that as a founder, he is “deeply attached to brand Kotak and will continue to serve the institution as non-executive director and significant shareholder’’.

“We have an outstanding management team to carry the legacy forward. Founders go away, but the institution flourishes into perpetuity. A long time ago, I saw names like JP Morgan and Goldman Sachs dominate the financial world and dreamed of creating such an institution in India. It is with this dream that I started Kotak Mahindra 38 years ago. I have deeply cherished every bit of this memorable journey, living my dream.

“We are now a pre-eminent bank & financial institution, created on the basic tenets of trust and transparency. We have created value for our stakeholders and provide over 1 lakh direct jobs. An investment of Rs 10,000 with us in 1985 would be worth around Rs 300 crore today. I am confident that this Indian owned institution will continue to play an even more important role in India’s transformation into a social and economic powerhouse,” he added.

In an emotional hand-written letter addressed to Apte, Kotak said, “I have mulled over this decision for some time and believe this is the right thing for the institution.”

He added that “with a view to sequencing this process from a transition and stability perspective’’, he has decided to take the action (resignation) after completion of the financial year and the annual general meeting for 2022-2023.

“The bank has taken necessary steps on succession and we await the RBI’s decision ...Over the next few months, I am going to be significantly occupied with some personal and family commitments. My elder son’s marriage functions are being planned. Consequently, considering the proximity of these events to the end of my tenure, I thought it appropriate to hand over the baton and stagger the transition,” he said.

“In the recent past, we have taken various measures to fortify our institution and make it future ready. These include steps taken to ensure it’s financial stability and strengthen the risk matrix. We have added talent in the areas of technology, customer experience, marketing and risk analytics. This further strengthens our outstanding leadership team.

“I stand in a lonely place of being a founder, promoter and significant shareholder of this great institution. It also bears our family name and carries that as its brand. The institution that we have together built stands for purpose, trust and integrity. I am committed as a stakeholder to see this institution sustain and grow,” Kotak added in his letter.

Court sends Goyal to ED custody

Dubious and personal expenses of Rs 1,000 crore were made from bank-loan funds for Jet Airways founder Naresh Goyal and his family members even as the airline “diverted” money to some tax havens, the Enforcement Directorate (ED) alleged on Saturday, after arresting the businessman in a money-laundering case.

Goyal (74) was taken into custody late Friday night after the federal probe agency took him to its Mumbai office from Delhi. A special court set up to deal with cases lodged under the Prevention of Money Laundering Act on Saturday sent him to the ED’s custody for 10 days till September 11.

The agency issued a statement claiming that the total non-performing assets of Jet Airways (India) Limited stood at Rs 5,951.46 crore, with the largest share (Rs 1,636.23 crore) being held by SBI.