SBI Chairman has brought back the debate on wide salary gap between private and government banks

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SBI Chairman has brought back the debate on wide salary gap between private and government banks

  • Several private lenders including Kotak Mahindra Bank and Yes Bank recently announced pay cuts as a cost cutting measure amid the coronavirus pandemic.
  • The chairman of India’s largest public sector bank State Bank of India (SBI), Rajnish Kumar said that the salaries are already so less, if pay cuts would be implemented, he would have to live on the streets.
  • According to the bank’s annual report, Kumar’s per day income stood at ₹ 8,092 in FY19, in contrast to 3.74 lakh earned by Aditya Puri of HDFC Bank, who is the highest paid bank chief.
  • However, the public bank chiefs get added perks like accommodation, which is exclusive of the salary.
Several private lenders including Kotak Mahindra Bank and Yes Bank recently announced pay cuts as a cost cutting measure amid the coronavirus pandemic. While the chairman of India’s largest public sector bank State Bank of India (SBI), Rajnish Kumar said that the salaries are already so less, if pay cuts would be implemented, he would have to “live on the streets”. He said this in a jovial way during a conference call with analysts.

The statement has yet again raised the issue of widening pay gap among the private and public bank chiefs.

Here’s how much the CEOs get paid in India’s top five private and government banks:
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Public lendersCEO salary in FY19 (Monthly)Private BanksCEO salary in FY19 (Monthly)
State Bank of India₹2.42 lakhHDFC Bank₹89 lakh
Punjab National Bank₹2.77 lakhAxis Bank₹30 lakh
Bank of Baroda₹2.74 lakhKotak Mahindra Bank₹27 lakh
Bank of India₹2.38 lakhICICI Bank₹22-26 lakh
Union Bank of India₹2.46 lakhIndusInd Bank₹16 lakh

As of 2019, the disparity between the remuneration of state-owned and private bank CEOs increased by nearly ₹70,000 in two years. According to a Mint analysis of public and private lenders, a public-sector bank chief had a daily compensation of ₹8,541, as per the FY19 annual reports. Private bank chiefs, on the other hand, were paid ₹2.48 lakh per day.

However, the public bank chiefs get added perks like accommodation, which is exclusive of the salary.

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"The executive compensation in the public sector, as is well known, is lower than that in the private sector... If PSBs are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive basis," said D Subbarao, former governor of the Reserve Bank of India during the 9th Global Banking Summit organised by the Indian Bankers’ Association and FICCI.

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