HomeBUSINESSKotak’s succession plan to  start  this year

Kotak’s succession plan to  start  this year


MUMBAI : Kotak Mahindra Bank will formally begin the process of succession planning later this year, as the term of its founder and managing director Uday Kotak ends in December 2023. In an interview after the bank’s June quarter earnings, joint managing director Dipak Gupta said that family members are not natural successors at banks, and Uday’s son Jay Kotak will follow the normal career path. The private sector lender reported a 53% rise in net profit in the June quarter. Edited excerpts:

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

Succession planning has nothing to do with the son. This is a scheduled commercial bank regulated by a central bank. Family members are not allowed. Jay is just a good employee. If he does well, he will move up the normal way. For succession, various pieces have been going on. We will start the process sometime later this year.

Any impact on credit growth due to rising interest rates?

It doesn’t look bad just now. Even though policy rates may go up, that’s a catch-up. It depends on how inflation moves. If inflation comes down to reasonable levels, growth will continue.

Why did net profit fall on a sequential basis?

We took a mark-to-market hit of about 800 crore, and if you add that back, it’s a good jump. Short-end interest rates have moved up close to 150-200 basis points in the quarter alone. Despite having a low-duration book, the shorter end has got impacted. We don’t run a big HTM (held-to-maturity) book. We normally keep it outside HTM. In future, it will help improve margins. Either we take the pain over a period of time, or we keep it in HTM.

Why have slippages increased sequentially?

There are two parts to that gross number. 800 crore of 1,400 crore is arising out of a specific RBI circular, which is called “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 must see a debit of the same amount. June end, close to 800 crore of accounts slipped because of “000″. But over the next few days, the customer puts that money, so it goes back to a normal account. Net slippage is, therefore, only 600 crore. These are technical NPAs. These are not delinquent NPAs.

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