India’s government-led public sector bankers are a poorly paid lot, at least compared to their private sector counterparts.
Take for instance Arundhati Bhattacharya, chairperson of State Bank of India, the country’s largest public-sector lender, which is among the world’s top 50 banks. The company commands a market share of 23% in deposits and 21% in advances, higher than any other bank in India. Yet, in 2016-17, Bhattacharya took home a salary of Rs28.96 lakh (pdf), a little less than 5% of the amount paid to ICICI Bank CEO Chanda Kochhar, who helms India’s largest private-sector bank. Kochhar earned a total compensation of Rs6.09 crore in the same period.
The disparity becomes even more glaring when Bhattacharya’s pay is stacked against the salary of Aditya Puri, managing director of HDFC Bank. Puri, India’s highest-paid banker, bagged a princely sum of Rs10.05 crore in 2016-17 (pdf).
And SBI is not an isolated case. Even at Punjab National Bank (PNB), another large public-sector bank (PSB), former CEO Usha Ananthasubramanian earned a salary of just Rs 30.45 lakh (pdf).
Here’s a comparison of the salaries of some of India’s top public and private-sector bankers (figures sourced from annual reports for 2016-17):
Key: 🏦 Public-sector bank; 🤑 Private-sector bank
|HDFC Bank 🤑|
|YES Bank 🤑|
|ICICI Bank 🤑|
|P S Jayakumar|
|Bank of Baroda 🏦|
|Dena Bank 🏦|
While top bankers at PSBs are entitled to a number of allowances and perks, experts say these hardly minimise the salary disparity.
“As compared to private banks, the CEOs of PSBs enjoy multiple benefits–(a) car, driver, house at a prime location, reduced rate of interest for loans etc. As you move up the ladder, the benefit magnifies,” Ajay Shah, head of recruitment services at Teamlease, a human resources service company, said. “But even after taking the fringe benefits into account, the income gap is still disproportionate.”
Even former Reserve Bank of India governer Raghuram Rajan once said, jokingly, that he felt underpaid. Before he stepped down from his position on Sept. 04, 2016, he drew a monthly salary of just Rs2.09 lakh and had highlighted the fact that the relatively lower earnings made it hard for India’s state-owned banks to attract talent.
“One of the problems, of course, is that as with all public sector entities, you overpay at the bottom and underpay at the top…” he said in August 2016. “Yes, you feel that you are doing the job for the broader public but you just make it harder to attract top talent.”
Rajan had advocated for the need to introduce other benefits, such as employee stock ownership plans (ESOPs), to improve the overall compensation structure in the public sector. The Banks Board Bureau, a committee set up by the Indian government, has also recommended introducing ESOPs and performance-linked incentives to improve the governance of PSBs. In the private sector, top employees rely heavily on stock options to boost their earnings. HDFC’s Puri, for instance, liquidated ESOPs worth Rs57 crore in the last fiscal year. For comparison, it would take SBI’s Bhattacharya close to 200 years to accumulate this sum at her current salary.
India’s PSBs are in the midst of a bad loan crisis, and the shortage of quality talent is compounding their woes. But with such low salaries, it’s no surprise that employees are more interested in the private sector instead.