Rs 1.57 crore paid as bonus to top 3 private bank CEOs for previous years

“At present, the bonus pertaining to the year 2016-17 proposed to be paid out in FY 2017-18 is pending RBI approval. Therefore, after RBI approval is obtained, the approved amounts, if any, will be paid and disclosed in the Corporate Governance Report for the next financial year,” HDFC Bank said in its annual report.

Sharma was to receive Rs 1.35 crore, as per Axis Bank’s annual report for 2017.

“The bonus amounts are the deferred portion of bonus approved in earlier years that was paid during fiscal 2018 and the comparable amounts for fiscal 2017 were Rs 4.5 million (Rs 45 lakh) for Chanda Kochhar,” ICICI Bank said in its report for FY18.

Interestingly, ICICI Bank’s annual report said, “The deferred portion of variable pay is subject to malus, under which the Bank would prevent vesting of all or part of the variable pay in the event of an enquiry determining gross negligence, breach of integrity or in the event of a reasonable evidence of deterioration in financial performance.

“In such cases, variable pay already paid out may also be subjected to clawback arrangements, as applicable.”

On similar lines, Axis Bank’s report said, “As a prudent measure, a portion of variable pay if it exceeds a certain threshold is deferred and is paid proportionately over a period of 3 years. The deferred variable pay amount of reference year would be held back in case of any misrepresentation or gross inaccuracy resulting in a wrong risk assessment.”

Emails sent to the respective banks and RBI remained unanswered.

Regulator's approval

At present, the bonus or variable pay given to the senior management of private banks proposed by their boards need to be approved by the banking regulator.

The missing bonuses come at a time when two of the above banks – ICICI and Axis – are battling allegations of governance and performance issues.

ICICI Bank and Axis Bank were penalized by the regulator for non-disclosures of non-performing assets (NPAs) which were listed as divergences from RBI’s assessment.

For FY16, ICICI Bank’s divergence in NPAs stood at Rs 5,105 crore and Axis Bank’s was at Rs 9,478 crore.

In FY17, Axis Bank’s divergence was worth Rs 5,633 crore, while ICICI Bank did not require any disclosure. The much immune HDFC Bank also reported a divergence of Rs 2,051 crore for FY17.

At present, Kochhar is on leave pending an enquiry on allegations of "conflict of interest" against her, while Sharma's term is set to end in December 2018 after she was forced to step down in April.

Moreover, both ICICI Bank and Axis Bank reported a decline in profit for FY18. ICICI Bank posted a 44 percent drop in net profit to Rs 6,777 crore while, Axis Bank’s net profit nosedived 93 percent to Rs 276 crore.

For the fourth quarter from January to March, ICICI Bank’s net profit halved to Rs 1,020 crore while Axis Bank suffered a loss of Rs 2,189 crore (dropping 278 percent).

Also Read: Shikha Sharma puts up a brave front even as Axis Bank posts record loss

Year's remuneration

For FY18, the total remuneration of all three banking honchos stood at Rs 21.66 crore.

The highest being that of HDFC Bank's Puri who received a total of Rs 9.65 crore. This was followed by Kochhar who received Rs 6.58 crore while Axis Bank's head was paid Rs 5.43 crore.

The remuneration for all three includes basic salary, compensation towards gratuity, provident fund and superannuation (except Kochhar) and other allowances and perquisites. However, it excludes employee stock options.

In terms of basic salary, Puri and Kochhar got a 15 percent hike while Sharma received a 7.6 percent raise.

For ICICI Bank and Axis Bank, the trouble is far from over.

In Q1 of FY19, Axis Bank’s net profit fell 46 percent to 701 crore, while ICICI bank reported its first quarterly loss ever at Rs 120 crore.

HDFC Bank remained insulated as it reported an 18 percent increase in its net profit at Rs 4,601 crore.