New Delhi: 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 RBI governor Raghuram Rajan had flagged the low remuneration issue last August saying it makes difficult for state-owned banks to “attract top talent, especially a lateral entry”.
According to annual reports of various banks, SBI chairman Arundhati Bhattacharya took home Rs. 28.96 lakh last fiscal, which is pittance when compared to remuneration her counterparts in private banks receive.
In comparison, ICICI Bank MD and CEO Chanda Kochhar received a basic salary of Rs. 2.66 crore last fiscal besides Rs. 2.2 crore performance bonus. In addition, she received allowances and perquisites of over Rs. 2.43 crore.
Similarly, Shikha Sharma, MD and CEO of Axis Bank, took home a basic salary of Rs. 2.7 crore and Rs. 1.35 crore as variable pay, besides host of perk and allowances, like Rs. 90 lakh HRA.
Yes Bank MD and CEO Rana Kapoor, who also happens to be promoter of the bank, took home Rs. 6.8 crore as salary in 2016-17.
HDFC Bank’s Managing Director Aditya Puri saw his remuneration rise marginally to Rs. 10 crore and exercised stock options worth over Rs. 57 crore during the last fiscal.
Speaking about public sector banks 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 merger with its subsidiary banks, caters to 42.04 crore customers with a market share of 23.07 per cent and 21.16 per cent in deposits and advances, as opposed to 18.05 per cent and 17.02 per cent respectively, before the merger.
The nearest rival of SBI, post merger, will have a market share of 5.96 per cent and 7.04 per cent in deposits and advances respectively.
Remuneration comprises various components including basic salary, allowances and perquisite, PF, 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.