Mumbai: Running a state-owned bank in India pays little more than flipping burgers at McDonald’s and Burger King outlets in Los Angeles International Airport, where the minimum cash wage is $11.03 an hour. In India, state-run bank chiefs make about $11.40.
They do get perks that American wage-earners don’t: a car, a driver and free housing. Still, the heads of India’s five biggest state-owned banks earned salaries and bonuses of Rs.20 lakh to Rs.25 lakh ($32,400 to $40,500), based on the latest data available. That works out to about Rs.705 an hour on average for what bank spokesmen say are 60-hour workweeks that include Saturdays. Their average top pay is less than 5% of those at India’s private banks, where chief executive officers also earn stock options.
“Significant and widening compensation differences with private-sector banks, leading to the erosion of specialist skills,” is constraining the ability of government-controlled lenders to compete for market share and profits, according to a report last year by a panel appointed by the Reserve Bank of India (RBI). Market share by assets of state-run banks will fall 10 percentage points by 2025 from 73% in 2013, it stated.
A teller at a state-run bank makes less than Rs.20,000 a month, or about $1.70 an hour for a 48-hour workweek.
R.K. Dubey, head of Canara Bank until he retired in September, earned about Rs.20 lakh on an annual basis while running the country’s fifth-largest lender, based in Bengaluru, according to company disclosures. Mumbai-based State Bank of India (SBI) chairman Arundhati Bhattacharya’s annual salary was roughly comparable during her first year heading India’s largest bank. S.S. Mundra, who until July was chairman of India’s second-largest lender, Bank of Baroda, was the highest-paid, at Rs.25 lakh. The positions at Canara and Bank of Baroda remain vacant awaiting government appointees.
The current and former chairmen declined to comment on their salaries, according to the banks’ spokesmen.
“They should be paid more and offered stock options like their peers in the private sector, as they are pulling the same weight,” Aditya Narayan Mishra, president of staffing in India for human-resources firm Randstad Holding NV, said in a phone interview from Bengaluru.
At India’s largest private lender, Mumbai-based ICICI Bank Ltd, CEO Chanda Kochhar was paid more than Rs.5.2 crore in the 12 months through March, according to the lender’s annual report. That works out to $263 per hour for a 60-hour week. While the amount includes a performance bonus, car and driver and other allowances, it excludes stock options of more than 290,000 shares for the year, the company’s annual report shows. The stock rose 60% last year.
“The management shouldn’t hold back on salary increases that are due because of the rise in nonperforming loans,” said the union’s Venkatachalam. “They are not responsible for this. It is the guilty, the defaulting corporates, who should be punished.”
Unions have been seeking higher salaries since 2012, when the last agreement negotiated in 2007 expired.
The government calls on state-run banks for costly financial-inclusion drives. The latest, announced in August, was aimed at providing bank accounts to 75 million Indian households without access to the formal financial system.
“As state-run banks have to support various government schemes and financial-inclusion efforts, productivity and profit per employee is lower than private-sector banks,” Randstad’s Mishra said.