HDFC Bank Ltd.s Sashidhar Jagdishan is the best-paid bank CEO in India, leading a group of private-sector bank bosses as the top earners in the sector.
In a country where leaders at state-run banks score prestige and perks such as company housing rather than pay, Jagdishan, who has been managing director and chief executive of India's biggest private-sector lender since October 2020, saw his total compensation rise 62% to 105.8 million rupees in the fiscal year ended March 31, 2023, according to data compiled by S&P Global Market Intelligence. This included 28.3 million rupees in annual salary, 36.4 million rupees in bonuses and 41.1 million rupees in "other" compensation.
Amitabh Chaudhry, managing director and CEO of Axis Bank Ltd., was the second highest-paid bank chief in India in the fiscal year, getting 97.6 million rupees in total compensation, including a salary of 44.0 million rupees. ICICI Bank Ltd. Managing Director and CEO Sandeep Bakhshi was third, with total compensation of 95.7 million rupees.
Comparatively, total compensation of CEOs of the five largest public sector banks in India range from 3 million rupees to 4.9 million rupees, Market Intelligence data shows.
Salaries in multiples
Overall, CEOs at private-sector banks earned significantly more total compensation than their counterparts at state-run banks. Dinesh Kumar Khara, chairman of State Bank of India, the country's biggest lender by assets, received around 3.7 million rupees in total compensation in fiscal year 2023, including a salary of 2.7 million rupees and 1 million rupees in other compensation.
"In India, for a number of years now, we have had salaries of CEOs of public sector banks (PSBs) being less than that of private sector banks (PVBs)," said Krishnan Sitaraman, senior director and chief ratings officer at CRISIL Ratings Ltd., an S&P Global company. "The former's salary structure is well laid out, while there is greater flexibility on the salaries paid to the latter."
Indian public and private sector banks have been reaping rewards of higher interest rates and credit growth in a fast-growing economy in recent quarters, reporting year-over-year increases in net profits and improvements in their asset quality. Banks are likely to continue benefiting from the broad-based economic recovery, even as margins may have peaked after the central bank's decision to pause rate increases. India's GDP is expect to grow 6.4% in the fiscal year ending March 2024 and to reach 7.0% in the fiscal year ending March 2027, S&P Global Ratings said in Dec. 5.
Prestige and perks
While public sector bank bosses earn less than their private sector counterparts, they do receive perks and prestige that do not form part of public sector bank executives' compensation, analysts said.
"The role of the CEO of a PSB brings with it a sense of prestige and status, which does have its appeal," Krishnan said. "It is to be also noted that CEOs of PSBs do have perquisites like government accommodation at prime locations, which are not included as part of the salary."
Former Bank of Baroda Ltd. Managing Director and CEO Sanjiv Chadha was the best-paid CEO at a public sector bank in fiscal year 2023. Debadatta Chand replaced Chadha in the role on July 1.
Data shows that bonus and "other" compensation made up a major portion of executive pay at private sector banks compared to public sector banks. ICICI Bank's Bakhshi, for instance, received 21.4 million rupees in bonus and 38.2 million in "other" compensation in the fiscal year. Among public sector banks, Bank of Baroda's Chadha was the only executive who received a bonus, amounting to 0.6 million rupees.
The total compensation of CEOs of Union Bank of India and Canara Bank comprised salaries only; there were no bonus and "other compensation" components for the fiscal year.
Talent quality
Public sector banks need to focus on attracting quality manpower to regain their competitive edge and market position, Krishnan said. In addition to exploring the possibilities of reviewing compensation, they should "better leverage on dimensions like differentiated work content and environment, learning opportunities, better work-life balance," among other factors.
Lower down the hierarchy, the trend is quite different, said Hemindra Hazari, a Mumbai-based independent banking analyst.
"The average salaries at state-owned banks are better than private sector banks at junior levels," Hazari said. "It's only at the senior management level that private sector banks pay a lot more."
Hazari does not believe there has been a talent exodus from public sector banks to private sector banks.
"There is no real bleeding of talent from public sector banks to private sector banks at the lower level," Hazari said. "And at the senior levels too, private sector banks usually look for talent from other private sector banks."
As of Dec. 8, US$1 was equivalent to 83.45 Indian rupees.
