Home Commercial book Kotak’s succession plan will begin this year

Kotak’s succession plan will begin this year

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Bombay : Kotak Mahindra Bank will formally begin the succession planning process later this year, with founder and chief executive Uday Kotak’s term ending in December 2023. In an interview after the bank’s June quarter results, co-chief General Dipak Gupta said the family members are not natural successors in banking, and Uday’s son, Jay Kotak, will follow the normal career path. The private sector lender reported a 53% increase in net profit in the June quarter. Edited excerpts:

Last month, Uday Kotak introduced his son at an event. Has the bank started succession planning?

Estate planning has nothing to do with the son. It is a regular commercial bank regulated by a central bank. Family members are not allowed. Jay is just a good employee. If he succeeds, he will progress normally. For the succession, various pieces followed one another. We will begin the process later this year.

An impact on credit growth due to rising interest rates?

It doesn’t look bad so far. Even if key rates may increase, this is a catch-up. It depends on the evolution of inflation. If inflation returns to reasonable levels, growth will continue.

Why did net profit fall sequentially?

We took a mark-to-market hit of about 800 crore, and if you add that up, that’s a good jump. Short-term interest rates rose by almost 150 to 200 basis points in the quarter alone. Despite being a short-lived book, the shorter ending was impactful. We do not manage a large HTM (held to maturity) book. We normally keep it outside of HTM. Going forward, this will help improve margins. Either we take the pain over a period of time, or we keep it in HTM.

Why did skids increase sequentially?

There are two parts to this raw number. 800 crores of 1,400 crore stems from a specific RBI circular, referred to as the “000 circular”. RBI introduced a new variable last year where if a customer’s account in a quarter…let’s say if you get an interest debit of X amount, you should see a debit of the same amount. At the end of June, around 800 crore accounts slipped because of “000”. But over the next few days, the client places that money, so it goes back to a normal account. The net slip is therefore only 600 crore. These are technical APMs. They are not delinquent NPAs.

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