Inside the leadership change at Kotak Mahindra Bank

The markets were surprised by Ashok Vaswani’s decision to step down from Kotak Mahindra Bank, whose shares slid over 3% on the first trading day after the announcement.

But many insiders saw the signs as early as January this year, when the bank onboarded 55-year-old Anup Saha as an executive director.

“This was nothing but strengthening of the bench before the leadership change,” says a senior Kotak Bank group executive, wishing not to be named.

Was Saha brought in with the idea of making him a successor to Vaswani?. Possible, but the bank already had one executive director — the 57-year-old Paritosh Kashyap.

Both Kashyap and Saha are in contention for the corner office at India’s nth largest bank by market capitalisation.

While the Board of Directors must provide a third nominee, an external name, t, the two people already in the system may have a better chance.

This is the second time in three years that the Board of Kotak Bank has had to choose an MD/CEO. Vaswani became the choice in January 2024 when the Reserve Bank of India (RBI) wanted to pick a person who isn’t an extension of the promoter, Uday Kotak.

Kotak still owns a 26% stake—the largest for any promoter among the big private banks in the country—and a board seat, and he is likely to have a significant say in the nomination.

A Kotak loyalist, Kashyap has been with the bank for decades. Knows things inside out. But Saha, who joined the bank just six months ago, brings precious experience as the managing director of Bajaj Finance.

What Saha may lack in terms of his time at the bank, he may offer in experience: he is a retail banker, and Kotak is a primarily retail bank. Kashyap has spent most of his time in the corporate segment, which is currently a fast-growing segment.

HDFC Bank’s corporate loan book grew by 13% in FY26, while the retail book grew by 6.5%. At ICICI Bank, both segments grew neck-and-neck at about 9%. Kotak Bank’s own corporate loan book has grown at 22% in FY26, compared with 14% growth in consumer loans.

There have been fewer takers, as it has always been a retail-focused lender, in a growth-hungry market for the bank that has shown a relatively smaller risk appetite than its larger peers.

Shares of Kotak Mahindra Bank have grown at a third of the pace of the broader private bank index during Vaswani’s tenure as CEO.

The industry shifted to a more aggressive mode post-pandemic, but Kotak Bank didn’t.

”At one point, Kotak Bank’s asset quality was something which was best in the segment. Now everyone has great asset quality. Kotak Bank can’t claim a premium over this,” says the executive quoted above.

Data as of March 2026

While the asset quality hasn’t been a differentiating factor, the overall pace of growth hasn’t been standout either. During Vaswani’s tenure, Kotak Bank’s loan book grew by 37.94%, nearly in line with the industry average of 38.42%. That isn’t impressive when peers with twice or thrice the loanbook have grown at the same pace.

Kotak investors want to see faster growth. The stock is currently trading at 20.67 times its trailing 12-month earnings, compared to the industry average of 15.50 times. While Kotak may seem ahead of its peers on paper, it is just a pale shadow of itself. Just five years back, Kotak used to command a PE of over 40x.

And it isn’t obvious that either Kashyap or Saha can certainly meet the street expectations. “At the top level, Saha only has shadow banking experience. The liability product there is completely different from liability products in the banks,” says yet another person with knowledge of the matter, wishing not to be identified. But for whatever it is worth, Saha has a lot of retail asset experience — and Kotak is primarily a retail bank.

So, there’s room for a surprise too, in the form of an external candidate. “We don’t know what is going to happen till the last moment. So, not second-guessing it,” a senior Kotak Bank executive quipped.

Beyond growth, Kotak has a lot of catching up to do

The bank hasn’t lived up to the expectations built on it being an early mover (compared to the other big banks) in the digital banking space. Kotak launched a digital banking drive in MM 2017 called 811, a hat-tip to demonetisation announced six months earlier on November 8.

Yet, almost a decade later, the bank’s digital business is much smaller compared to peers.

To be fair, within just three months of Vaswani taking over, the RBI barred Kotak Mahindra Bank from onboarding new customers through the Bank’s online and mobile banking channels and issuing new credit cards, citing ‘deficiencies in the IT Examination of the Bank.’ The ban persisted for more than a year, which, many believe, took steam off the bank’s digital pursuits.

Be that as it may, the challenge is now the incoming CEO's responsibility, just as is the need for faster growth of the loan book.