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IDBI Bank waves ‘private sector’ tag to seek 10 times rise in CEO pay

The bank’s board has proposed a hike of nearly 10 times in Sharma’s salary, from Rs 2.62 lakh per month to Rs 20 lakh per month — Rs 2.4 crore annually — with effect from March 19, 2022.

Written by George Mathew | Mumbai |
Updated: April 15, 2022 12:16:05 pm
IDBI Bank is controlled by the government directly and indirectly. Public sector LIC holds 49.24 per cent stake in the bank. (File)

The pay package of IDBI Bank MD and CEO Rakesh Sharma is likely to surge by over 10 times with the bank putting a resolution for postal voting by shareholders. The bank’s board has proposed a hike of nearly 10 times in Sharma’s salary, from Rs 2.62 lakh per month to Rs 20 lakh per month — Rs 2.4 crore annually — with effect from March 19, 2022. Besides, the other perquisites include semi-furnished accommodation, club membership, car for official purposes, entertainment expenses, leave and leave fare concession, PF, gratuity, annuity policy and other retirement benefits, according to the resolution moved by the bank for postal voting.

There are also stock options and variable pay as may be decided by the Nomination and Remuneration Committee of the IDBI Bank board and subject to the RBI approval. As a result, Sharma’s total package is expected to go up further.

When compared to this, the salary of Dinesh Khara, who became Chairman of SBI, India’s largest bank, on October 7, 2020, was Rs 38.12 lakh (Rs 3.17 lakh per month) in 2020-21, according to SBI Annual Report. Punjab National Bank’s former MD and CEO Mallikarjuna Rao received a total salary of Rs 31.22 lakh (Rs 2.6 lakh per month) in FY21, says the PNB Annual Report. According to the bank’s Annual Report for 2020-21, Sharma’s salary was Rs 2,62,548 per month.

This included Rs 2,24,400 salary and applicable DA (presently 17 per cent) of Rs 38,148.

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IDBI Bank is controlled by the government directly and indirectly. Public sector LIC holds 49.24 per cent stake in the bank. The total promoter holding, including LIC and the government stake, was 94.71 per cent, as of December 2021. However, according to the bank, it has been categorised as a ‘Private Sector Bank’ for regulatory purposes by the Reserve Bank of India, with effect from January 21, 2019, consequent upon Life Insurance Corporation acquiring 51 per cent of the total paid-up equity share capital of the bank.

Explaining the rationale for the salary hike, the bank said: “The November 2019 circular of RBI on compensation of Whole Time Directors (WTD) in private sector banks is applicable to WTDs in IDBI Bank also.” “The current salary drawn by the MD & CEO of IDBI Bank is based on the approval given by RBI for FY20-21, in terms of RBI guidelines on compensation of Whole Time Directors in private sector banks. The reappointment of MD & CEO has also been approved by RBI for a period of three years,” the bank said in a statement to The Indian Express.

However, the Annual Report of IDBI Bank for 2020-21 says, “Pay and allowances for employees is presently based on structured pay scale in alignment with the structure prevailing in public sector banks.” Sharma actually retired from Canara Bank in July 2018. He was appointed as IDBI bank MD and CEO in October 2018. He has now been given a three-year extension.

The e-voting on the resolution which started on April 6 will end on May 5, 2022.

The bank’s plan to hike the CEO salary follows the government’s proposal to privatise the bank by selling part of its stake. LIC, which is also the promoter of the bank, is also likely to sell part of its stake in the bank in the privatisation process.

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