SBI chairman’s salary a fraction of that of private bank bosses
New Delhi: State Bank of India (SBI), one of the world’s 50 largest banks, pays only a small fraction to its top management as compared to private sector players like ICICI Bank and HDFC Bank.
Former Reserve Bank of India (RBI) governor Raghuram Rajan had flagged the low remuneration issue in August 2016 saying it makes difficult for state-owned banks to “attract top talent, especially a lateral entry”.
SBI chairman Arundhati Bhattacharya took home Rs28.96 lakh in 2016-17, which is pittance when compared to remuneration of her counterparts in private banks, according to an analysis of annual reports of various banks.
In comparison, ICICI Bank’s managing director (MD) and chief executive officer (CEO) Chanda Kochhar received a basic salary of Rs2.66 crore during the same period, besides Rs2.2 crore performance bonus to be paid over the next few years. In addition, she received allowances and perquisites of over Rs2.43 crore. The total compensation received by Kochhar in 2016-17 stood at Rs6.09 crore.
Similarly, Shikha Sharma, MD and CEO of Axis Bank, took home a basic salary of Rs2.7 crore, and Rs1.35 crore as variable pay, besides a host of perks and allowances like Rs90 lakh HRA (house rent allowance). Yes Bank MD and CEO Rana Kapoor, who also happens to be the promoter of the bank, took home Rs6.8 crore as salary in 2016-17. HDFC Bank’s MD Aditya Puri saw his remuneration rise marginally to Rs10 crore and exercised stock options worth over Rs57 crore during 2016-17.
Speaking about public sector banks (PSBs) at a banking conference in Mumbai, Rajan had said state-owned banks tended to overpay at the bottom but underpay their top executives. He jokingly said he himself was underpaid and the disparity made it harder to attract talent from outside at the top level in public sector banks.
On the business front, SBI, after a merger with its subsidiary banks, caters to 42.04 crore customers with a market share of 23.07% and 21.16% in deposits and advances, as opposed to 18.05% and 17.02% respectively, before the merger.
Punjab National Bank, the nearest rival of SBI among PSBs post-merger, will have a market share of 5.96%, and 7.04% in deposits and advances.
Remuneration comprises various components, including basic salary, allowances and perquisite, provident fund, superannuation allowances, gratuity and performance bonus, and payment of performance bonus is deferred over a multi-year period.
Not only such high disparity in compensation makes it difficult for the government to hire top managers laterally at public sector banks, as pointed out by Rajan, it also impacts the motivation of public sector managers who have to fiercely compete with their private sector peers.