PRIVATE BANK HONCHOS LIKE UDAY KOTAK, ADITYA PURI, SHIKHA SHARMA, CHANDA KOCHHAR RAKE IN BIG MONEY IN CONTRAST TO PSU COUNTERPARTS

Uday Kotak of Kotak Mahindra Bank led the executives pay increments in top banks last fiscal with a 58% jump, while Aditya Puri of HDFC Bank remained the highest paid bank chief as the Reserve Bank of India (RBI) debates capping fixed pay at 15%, and linking compensation to risk taken.

Executives at state-run banks remained under-paid, earning just a fraction of what private sector colleagues took home. For instance, retired State Bank of India chairman Om Prakash Bhatt received a 9.7% effective raise at Rs 21.4 lakh, in a year when shares rose 33%.

Salaries of Shikha Sharma, chief executive officer at Axis Bank and ICICI Bank's Chanda Kochhar also jumped more than 30%, but are not comparable since they took up the job in the middle of the fiscal period a year earlier, said executives at the respective banks. YES Bank MD and CEO Rana Kapoor, who owns 26.57% of the bank, earned a 10% rise at Rs 1.24 crore.

"Capping salaries is a complex issue and there is no straight answer," says Uday Sodhi, CEO of online portal Head Honchos. "RBI is trying to be prudent, but the industry needs to retain talent at the senior level. There should be an incentive for senior executives to continue working with Indian banks which will otherwise lose out to their international rivals."

The biggest jump in remuneration was for Kotak, executive vice chairman and managing director of Kotak Mahindra Bank whose salary rose 58% to Rs 1.78 crore in fiscal 2011, from Rs 1.13 crore a year ago, its annual report shows. Kotak owns 41.56% of the lender and is also the top underwriter of initial public offerings.

"To lead by example on austerity following the downturn, Uday Kotak did not take any incentive for the year ended March 2009,'' said a spokesperson for Kotak Mahindra Bank. "Kotak's remuneration for FY11 includes an incentive of Rs 45 lakh. "The bank's net profit rose 20% last fisal, and shares returned 22% compared to the BSE Bankex's 25% gains. Compensation at financial services firms has become a much debated topic after the 2008 credit crisis with the International Financial Stability Board prescribing methods on how to compensate bank executives.

SOURCE: http://articles.economictimes.indiatimes.com/2011-07-11/news/29761121_1_kotak-mahindra-bank-uday-kotak-bank-md