Pannu, who joined the club when Carson Yeung completed his takeover at St Andrew's in October 2009, will stay as a director of the club until he is either voted off by the shareholders or resigns.
A statement on the club's official website reads: "The service agreement of Peter Pannu will not be renewed beyond 30 September 2014.
"Panagiotis Pavlakis (Panos) will continue to act as representative of the Birmingham City board in the UK and oversee the day-to-day running of the club with full support from the UK management team."