HDFC Bank’s managing director Aditya Puri remained the highest-paid bank chief executive in India with a monthly basic salary of Rs 89 lakh in FY19 as per an ET report. Aditya has led the bank since its inception 25 years ago and the Reserve Bank of India had approved his re-appointment as managing director of HDFC bank for another two years last November. At number two position was Axis Bank’s CEO Amitabh Chaudhry, who took over the position in January, with a basic monthly salary of Rs 30 lakh. The bank ranks third in terms of assets among private sector banks.
Meanwhile, Kotak Mahindra Bank’s Uday Kotak took the number three slot with a monthly basic salary of Rs 27 lakh and ICICI Bank’s former boss Chanda Kochhar was at fourth position in the list compiled from annual report data, has received Rs 26 lakh per month until her exit.
Kochhar’s successor Sandeep Bakhshi, who became the CEO last October, came at number five position, having earned an average Rs 22 lakh per month. Following him was IndusInd Bank’s Romesh Sobti, with an average Rs 16 lakh per month basic pay.
While the data has been compiled from annual reports, the compensation is not necessarily comparable, keeping in mind the fact that at least two CEOs — Bakhshi and Chaudhry — took charge at different points during the year. Bakhshi started as COO in June and became CEO in October while Chaudhry became CEO in January. Thus the monthly 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.
In recent times, the RBI has not only stepped-up its scrutiny of private bank CEO appointments but is also bent on linking executive pay and perks to the performance of the respective banks in order to enhance accountability. CEO compensation at banks has come into focus over profitability and bad loans and in some cases, the regulator has had to withhold approval for CEO bonuses.
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 percent of the fixed salary. Though at the moment, it is not clear how senior management compensation will be structured if the RBI guidelines are implemented but 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. Some bankers have criticized the proposed guidelines as too strict, hinting that the proposals will discourage risk-taking, innovation and the culture of thinking out of the box at the banks.