On Wednesday, the term of Uday Kotak as non-executive chairman of the debt-ridden IL&FS group has been extended by the Government of India for another six months. The extension of Kotak who is also the managing director and chief executive officer of Kotak Mahindra Bank, till April 2, 2022, was done by the government through a notification.
On September 21, 2021, the Department of Financial Services in the Ministry of Finance issued the notification, last year the same was done by the government by extending the term by 12 months till October 2, 2021, whereas from October 3, 2021, the extension for the six-month term will begin.
Kotak tweeted on September 20 that “the government-appointed board estimates 61% recovery at IL&FS.” In reaction to the Evergrande crisis, it reminded Kotak of China’s Lehman moment and is similar to IL&FS. Kotak said that calm to the financial markets has been provided by the Indian government during the IL&FS crisis.
He said that during the IL&FS crisis Indian government acted swiftly and provided calm to financial markets. As the Banking Regulation Act, 1949 says that a person who is the director of any other company cannot manage the bank along with the concurrence of the RBI a temporary exception for three months or nine months can be given to the person.
According to the notification by the government said, “the statutes will not apply to Kotak Mahindra Bank in so far as it relates to its Managing Director and Chief Executive Officer Uday Kotak being on Board of Infrastructure Leasing and Financial Services Limited as its non-executive director for a further period up to the 2nd day of April 2022.”
Over 250 companies that were part of the overall IL&FS group have discovered a complex with the Uday Kotak-led board which has over ₹94,000 crores to lenders, Over 90 percent of the flagship company’s assets cannot be used properly.