If we try to define the ownership of UTI Bank, the outcome will be somewhat hazy. It falls into a unique category created when the Reserve Bank of India issued licences to new banks in the 1990s - a private bank owned by public sector institutions.

The haze, however, did not stand in the way of the UTI Bank becoming arguably the most sought-after bank by investors after HDFC. Its share price, which closed at Rs 474.25 (on May 3), has risen nearly 20 times since January 2000, which, incidentally, was when P J Nayak took charge as chairman and managing director.

Last month, the bank declared a 36 per cent rise in earnings for 2006-07. In the same period, the country's largest private sector lender, ICICI Bank, reported a meager 4.5 per cent rise in net profit. UTI Bank's net bad loans stand at 0.61 per cent - a low in Indian banking.

Yet, the bank's shares fell soon after it declared the results following a communication from Nayak that he would not like to continue beyond his current term that ends in July this year.

A former bureaucrat, Nayak moved to UTI Bank as a director in 1999. Founded by state-run Unit Trust of India, it was a fledgling outfit at that time and Nayak's move was seen as a step down. He came from Unit Trust of India, where he was an executive trustee and considered a strong contender for the top post.

That race, however, turned highly political, and Nayak, who will turn 60 this July, chose to move to the bank. He managed to steer the bank through its turnaround, helped along the way by a significant chunk of business from government undertakings.

In his years at the bank, Nayak has done enough to be dubbed successful. Yet, last month's communication was not the first of its kind from him.

The first time he wanted to quit was in 2001, amid speculation that a joint parliamentary committee would examine his role in the aborted merger of UTI Bank and GTB. He was asked to stay back as the rumours were found to be unfounded. Nayak offered to resign again three years later when an attempt was made to split the post of chairman and managing director into two.

The same issue arose again in February this year. Soon after the UTI Bank board extended Nayak's term to July 2009, the RBI, citing the recommendation of the Ganguly Committee on Corporate Governance, declined to approve the extension saying Nayak could be either the chairman or the managing director, not both.

Not surprisingly, the UTI Bank board has thrown its weight behind Nayak. On Monday, it recommended his name as the executive chairman for two years beginning August 1. As executive chairman, Nayak can function as the de facto chief executive without the embellishment of the managing director's designation.

The ball is in the RBI's court now. Business Standard's attempt to get a response from it drew a blank as the formal communication of Nayak's new appointment has yet to arrive at Mint Road.