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Bad News for Kotak Bank Shareholders | Yadnya Investment Academy

Bad News for Kotak Bank Shareholders | Yadnya Investment Academy

Published on 27 April 2021 Views 108 Comments 0

Bad News for Kotak Bank Shareholders | Yadnya Investment Academy

Recently, a notification passed out by the Reserve Bank of India for the Private Sector Banks in India, where it has fixed the tenure of MD and CEO of the Private Sector Banks up to 15 years. This news will significantly impact every Private Sector Bank, but this rule may negatively impact Kotak Bank growth. So, How this rule might be negative for Kotak Mahindra Bank share value and its Shareholders, let’s discuss.

Introduction: Kotak Bank Share Value Research

Reserve Bank of India- the regulatory body of the Banks in India, has recently released a rule wherein it has fixed the tenure of MD and CEOs of any Private Sector Banks for up to 15 years. The rule released by the RBI has also provided some. This rule will undoubtedly impact every private sector bank whose MD and CEO are near this capped period provided by RBI. But this rule is more harmful to the Kotak Bank as Mr. Uday Kotak has already completed 17 Years as MD of the Bank. Mr. Uday Kotak has already got an extension for three years in January 2021. Hence, till January 2024, there is no such problem for the position of Uday Kotak in the Bank.

So, Let’s know about what lies ahead for Kotak Bank and its shareholders in the future.

The Reason Behind These Curbs By RBI:

  • Wrong examples set up by Heads of certain private sector banks in India have affected the other Heads of Private Sector Banks.

  • The banking business is a lending business. Hence, RBI is worried about shareholders’ as well as Depositor’s money.

What Can Kotak Bank Do Now?

  • Kotak Bank is also facing issues with Promoter’s Holding; hence it may come up with a listing of Subsidiaries of Kotak Bank like Kotak Securities, Kotak Mutual Fund, Kotak Life Insurance, Kotak General Insurance, Kotak Prime, etc.

  • There can be many restructuring in the Bank in the coming three years to reduce the Promoter’s Shareholding.

  • Kotak Bank will also look out for Replacement of the head body.

 

Conclusion

The directives given by the RBI for these Private Sector Banks will be a subject of Worrisome for all the private banks and especially for Kotak Mahindra Bank, as its MD, Mr. Uday Kotak, has already crossed the tenure fixed by the RBI. But, looking at the bank’s long-term vision and Uday Kotak, Kotak Bank can also come up with a solution for this concern. One needs to be surely watchful for this stock but should enter or exit with proper research and on his/her own conviction.

 

 

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