Mumbai: India’s private sector banks have turned cautious on growth or compensation of their rank and file, but the salaries of their chief executive officers (CEOs) do not seem to have been significantly affected.
Chanda Kochhar, managing director and CEO of India’s largest private sector bank, ICICI Bank Ltd, has been offered a salary in the range of Rs84 lakh to Rs1.62 crore a year. The bank’s previous managing director and CEO K.V Kamath, who passed on the mantle to Kochhar in May, drew Rs1.37 crore as salary in 2008-09. Kochhar’s package will be valid for the next five years, till 31 March 2014.
ICICI Bank has decided not to sanction any performance pay for 2009 and will also not grant stock options to directors. It has given a 3% raise to all staff for 2009-10. The bank’s total assets on 31 March were to the tune of Rs3.79 trillion. Its net profit for the year was Rs3,758.12 crore.
The remuneration of CEOs of private banks is cleared by the Reserve Bank of India while salaries of the CEOs of public sector banks are governed by government rules. Ahmed Raza Khan / Mint
Aditya Puri, managing director and CEO of the country’s second largest private bank HDFC Bank Ltd, gets a basic pay in the range of Rs1.08-1.32 crore.
The bank’s total assets were Rs1.83 trillion as on 31 March 2009. Its net profit for year ended 31 March was Rs2,244.9 crore.
Shikha Sharma, managing director and CEO of Axis Bank Ltd, the third largest private sector bank in terms of assets, has been offered a basic pay of Rs1.25 crore.Her predecessor P.J. Nayak earned around the same.
The bank had Rs1.48 trillion worth of assets in March 2009 and its net profit for the year ended March was Rs1,815.36 crore.
In addition to the basic pay, the salary packages of Puri and Sharma include performance bonuses and other allowances.
The remuneration committee of the respective banks have also granted stock options to these two CEOs. Axis Bank’s Sharma will get a variable pay, to be decided by the bank’s remuneration and nomination committee, subject to a maximum of 25% of salary drawn during the year.
If Sharma does not live in a house provided by the office, she will get a house rent allowance of Rs48 lakh every year.
Kochhar’s house rent allowance (in case she does not use office accommodation) is Rs12 lakh.
Romesh Sobti, managing director and CEO of IndusInd Bank Ltd which has assets of Rs27,615 crore, earns Rs1.08 crore plus other allowances and stock options. The bank’s net profit for the year ended 31 March was Rs50.52 crore.
CEOs of public sector banks, in contrast, get an annual salary of around Rs12 lakh. This is after the implementation of the Sixth Pay Commission’s recommendations, following which their salaries increased by at least 60%. These banks account for close to 80% of the banking industry in India in terms of assets.
Apart from the salary, the heads of public sector banks earn a maximum performance-linked bonus of Rs8 lakh per year if they are able to meet all performance targets. These targets are outlined in an agreement signed by individual banks with the finance ministry, representing their majority owner, the government, in the beginning of every fiscal.
The remuneration of CEOs of private banks is cleared by the Reserve Bank of India while salaries of the CEOs of public sector banks are governed by government rules. Employees of public sector banks, however, are paid in accordance with an industry-wide wage pact that lasts for five years.