RBI caps tenure for private banks’ MDs and CEOs: Here’s what brokerages say

SUMMARY

Brokerages believe that the Reserve Bank of India's (RBI) new rules over the tenure of MDs and CEOs of private banks will impact Kotak Mahindra Bank the most. Here's what they say:

By CNBC-TV18Apr 27, 2021 9:04:28 AM IST (Published)

Nomura says RBI's rule w.r.t cap on tenure will impact Kotak Mahindra Bank. The bank's MD & CEO Uday Kotak had a dominant hand in driving the narrative behind the stock in the previous decade and his absence from an executive role may cap any further improvement in valuation multiple, Nomura said.

Jefferies says Kotak Mahindra Bank may be first affected by RBI's MD & CEO cap rule. RBL Bank and others may also be affected but with a lag.

JPMorgan feels the new rules by RBI are positive for governance architecture but could dissuade license aspirants.

CLSA said that Kotak Mahindra Bank will be the most impacted as its current MD’s & CEO’s tenure exceeds the 12-15-year cap. Deputy MD Dipak Gupta’s tenure also exceeds the limits prescribed. Both their tenures end in December 2023 after which, they are unlikely to get an extension. Thus CLSA expects a leadership transition for Kotak Bank in January 2024.