State Bank of India is not only the largest public sector bank of India but is also among the top 50 banks of the world. However, the salary the bank pays to its top management is only a fraction of that paid by private sector banks such as HDFC Bank, and ICICI Bank to their top executives.
Analysis of annual reports of various banks reveals that Arundhati Bhattacharya took home Rs. 28.96 lakh in the financial year 2016-17, which is a very small amount when compared to what her counterparts in private banks earned during the same duration.
For instance, the MD and CEO of ICICI Bank, Chanda Kochhar, earned a total compensation of Rs. 6.09 crore during the financial year 2016-17. The amount is a total of her basic salary of Rs. 2.66 crore, allowances and perquisites of Rs. 2.43 crore and a performance bonus of Rs. 2.2 crore that will be paid over the coming years. Similarly, Rana Kapoor, MD, CEO and promoter of Yes Bank, took home a salary of Rs. 6.8 crore.
Perhaps, this is the reason why public sector banks face a tough time in attracting the best talent. Raghuram Rajan, former governor of the Reserve Bank of India, had raised the issue of low remuneration by government banks.
As correctly pointed out Raghuram Rajan, the stark disparity between compensation of top managers in the two sectors not only makes it difficult for the government to fetch the best talent into public sector banks but also adversely affects the morale of public sector managers who have to face intense competition with their peers in the private sector.