Aditya Puri, HDFC Bank's Managing Director, is not only the longest-serving head of any private bank in the country but has also been the highest-paid banker for around a decade now. In FY19, he took home a monthly basic salary of Rs 89 lakh, and his total earnings stood 209 times higher than the other employees. The second top-earning bank head is Axis Bank's CEO Amitabh Chaudhry, who took over from Shikha Sharma in January. In a regulatory filing in December, Axis Bank announced a basic salary of Rs 3.60 crore for Chaudhry, 24 per cent higher than his predecessor's pay in FY18 but close to half of what he earned in his previous stint as MD and CEO at HDFC Life.
With a basic monthly salary of Rs 30 lakh, Chaudhry stands a distant second to Puri, The Economic Times reported. Uday Kotak, MD of Kotak Mahindra Bank came in at number three with a monthly basic salary of Rs 27 lakh followed by ICICI Bank's head Sandeep Bakhshi and IndusInd Bank's Romesh Sobti. As per data compiled from the banks' annual reports, Chanda Kochhar, the former managing director and CEO of ICICI Bank was better paid than the current chief - she was earning Rs 26 lakh per month until her ignoble exit while Bakhshi earned an average Rs 22 lakh per month. Sobti came in at rank five with an average basic pay of Rs 16 lakh per month.
According to the daily, the monthly salary numbers have been arrived at after dividing the annual amount given in the report by the number of months they have served the respective banks. For instance, Bakhshi started as COO in June and became CEO after Kochhar left the post on October 4. On the other hand, Chaudhry has only served for seven months so far. Significantly, the salary figures do not include perks and other privileges since each bank treats it differently.
Yes Bank CEO Ravneet Gill's salary was listed at Rs 59 lakh for March, but was left out of the top 5 rankings since the bank reports a consolidated number including perquisites, contributions towards provident fund and medical reimbursement under the head of salary. His predecessor Rana Kapoor's gross salary was Rs 6.48 crore for the 10 months ended January.
In recent times, the RBI has not only stepped-up its scrutiny of private bank CEO appointments - especially in the wake of the regulator's war of words with the government over accountability for the Nirav Modi-PNB fraud - but is also keen to link executive pay and perks to the fortunes of respective banks in an attempt to enhance accountability.
While the RBI already clears the compensation structure as well as renewal of CEO tenures, in February it also released draft guidelines on compensation structure for bank CEOs and whole-time directors for a wider discussion. The proposed guidelines seek to restrict the salary's variable component at 200 per cent of fixed salary. Interestingly, employee stock options, or ESOPs, have been considered a part of variable pay, which was not the case earlier. There are also provisions for penalties - to be recovered from the CEO - for NPA divergences.
For now, there is no clarity on how senior management compensation will be structured if the RBI guidelines are implemented. The moment the CEO's variable pay is capped, the bank will also not be able to include a higher variable component in the salary structure of senior employees who report to the CEO. However, some bankers have criticised the proposed guidelines as too strict, adding that the proposals will discourage risk taking/innovation and culture of thinking out of the box.