The government on Wednesday extended the term of Uday Kotak as non-executive chairman of debt-ridden IL&FS group by one year.
The government through a gazatte notification extended term of Kotak, who is managing director and chief executive officer of Kotak Mahindra Bank, till October 2, 2021.
The notification was issued by the Department of Financial Services in the Ministry of Finance on Wednesday and signed by Joint Secretary Amit Agrawal.
"And whereas, the central government, on the recommendations of the Reserve Bank of India (RBI), has considered it necessary to grant the said exemption to Kotak Mahindra Bank for a further period of one year with effect from the 3rd day of October 2020," it said.
Under the Banking Regulation Act, a bank cannot be managed by any person who is a director of any other company. She can be given a temporary exception for three months or nine months with the concurrence of the RBI.
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 period up to the 2nd October, 2021", a gazette notification from the Government said.
Kotak was appointed by the Government as the head of the lender's board in 2018 to help the troubled company come out of difficulties, after the state took over the board.
"This extension is a step towards fulfilling the National and Public duty, entrusted on the new IL&FS Board, to resolve one of India's largest financial sector challenges - comprising of over 300 companies in the Group," IL&FS Group spokesperson said.
The Uday Kotak-led board has discovered that there was a complex web of over 250 companies which were a part of the overall IL&FS group, which has an outstanding of over ?94,000 crore to lenders. Over 90 per cent of the flagship company's assets are classified as dud.
The board is trying to keep the company as a going concern by focusing on asset sales and has appointed a resolution professional to steer the way.