Private lender IDBI Bank has proposed a nearly 10-fold hike in the salary of its managing director and CEO Rakesh Sharma who had been instrumental in bringing the bank out of the RBI’s restrictive prompt corrective action (PCA) framework.
The bank has sought the approval of its shareholders through a postal ballot which started on April 6 and will end on May 5, 2022, to pass the ordinary resolution, among others.
The lender, in which LIC holds a majority stake, will declare the results of the postal ballot on or before May 7, 2022.
Members’ permission is also sought to re-appoint Sharma as the MD & CEO for another three years with effect from March 19, 2022.
The bank proposes for approval of the members to transact special business through postal ballot only by way of voting through electronic means, to consider and, if thought fit, to pass as ordinary resolution for re-appointment of Rakesh Sharma as a non-rotational director and Managing Director & Chief Executive Officer (MD&CEO) for a period of three years with effect from March 19, 2022, the bank said in a regulatory filing.
The Reserve Bank approved Sharma’s re-appointment in mid-February.
"…pursuant to the recommendation of the NRC and the board of directors of the bank, approval of the members of the bank, be and is hereby accorded to the payment of remuneration by way of salary, allowances and perquisites to Rakesh Sharma, as the MD&CEO of the bank with effect from March 19, 2022, up to Rs 2,40,00,000 approximately for FY2022-23, to be approved by the RBI,” IDBI Bank said in the filing.
The perquisites involve the facility of semi-furnished accommodation, club membership, car for official purpose, entertainment expenses, payment of income-tax on perquisites by the bank to the extent permissible, medical reimbursement, leave and leave fare concession, gratuity, retirement benefits among others.
Any revision, in salary and perquisites shall be recommended by the Nomination & Remuneration Committee (NRC) and board and subject to RBI approval, the bank said.
Sharma draws a salary of Rs 2.64 lakh per month, while the bank has proposed to raise the salary to about Rs 20 lakh per month.
Following RBI’s approval, IDBI Bank in a meeting held on February 24, 2022 had approved the re-appointment of Sharma for a period of three years with effect from March 19, 2022, subject to the approval of the members of the bank.
Explaining the rationale behind seeking a hike in Sharma’s salary, IDBI Bank said Rakesh Sharma has done "a commendable job in bringing the bank out of PCA and improving the overall performance of the bank during his tenure”.
It said the promoters and stakeholders of the bank have also shown confidence in him, since he has been able to bring transformational changes in the bank.
"Rakesh Shamra is fit and proper to be re-appointed as MD&CEO pursuant to the fit and proper norms issued by the RBI,” it added.
The lender said that it Sharma has given his consent to be re-appointed and is not disqualified from being appointed as director on the board of the bank.
Sharma possesses the requisite qualifications, skills, experience and special knowledge required for the said post.
The annual remuneration payable to Sharma during his tenure is subject to approval of the RBI, it added.
A seasoned banker with over 40 years in banking, Sharma had started his career in State Bank of India and held various responsibilities in both India and abroad.
He moved from the position of Chief General Manager in SBI to Lakshmi Vilas Bank as MD&CEO and served there from March 7, 2014 till September 9, 2015.
He then joined Canara Bank as MD & CEO on September 11, 2015 and served for a period of three years till July 31, 2018.
While in Canara Bank, he also held the position of Chairman in the group companies of Canara Bank.
He then joined IDBI Bank as MD & CEO with effect from October 10, 2018 and continues to be the MD & CEO.
In March 2021, the RBI removed IDBI Bank from its enhanced regulatory supervision or Prompt Corrective Action (PCA) framework after a gap of nearly four years on its improved financial performance.
RBI had placed IDBI Bank under PCA framework in May 2017, after it had breached the thresholds for capital adequacy, asset quality (net NPAs was over 13 per cent in March 2017), return on assets and the leverage ratio.
IDBI Bank previously categorised as a public-sector bank is now termed as private sector lender controlled by LIC.
As per bank’s shareholding pattern as of March 31, 2022, LIC has 49.24 per cent stake in the bank and government holding stands at 45.48 per cent, taking their combined equity to 94.71 per cent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
