Private lender IDBI Bank has offered to boost the salary of its Managing Director and CEO Rakesh Sharma, who was instrumental in the bank’s exit from the RBI’s restrictive Rapid Corrective Action (PCA) framework, by almost 10 times. . The bank has sought the approval of its shareholders through a mail-in vote that began on April 6 and will end on May 5, 2022, to pass the ordinary resolution, among other things. The lender, in which LIC holds a majority stake, will report the results of the postal ballot no later than May 7, 2022.
Members’ permission is also sought to reappoint Sharma as CEO and CEO for an additional three years commencing March 19, 2022. The bank is proposing for members’ approval to transact special business by mail-in vote only by way of vote by electronic way. means, to consider and, if thought fit, to pass an ordinary resolution for the reappointment of Rakesh Sharma as non-rotating Director and Managing Director and Chief Executive Officer (MD&CEO) for a period of three years from March 19, 2022, the bank said in a regulatory filing.
The Reserve Bank approved Sharma’s reappointment in mid-February. “…in accordance with the recommendation of the NRC and the Board of Directors of the bank, the approval of the members of the bank, be and is hereby given for the payment of remuneration in the form of salary, allowances and perquisites to Rakesh Sharma, as MD&CEO of the bank effective March 19, 2022, up to approximately Rs 2,400,000 for the financial year 2022-23, to be approved by the RBI,” IDBI said Bank in the folder.
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Perquisites include installation of semi-furnished accommodation, club membership, car for official purposes, entertainment expenses, payment of income tax on perquisites by the bank to the extent permitted, reimbursement of medical expenses, holidays and reduced holiday rates, gratuities, retirement benefits, among others. Any revisions to salary and perquisites will be recommended by the Nomination and Remuneration Committee (NRC) and the Board of Directors and subject to RBI’s approval, the bank said.
Sharma is paid a salary of Rs 2.64 lakh per month, while the bank has offered to raise the salary to around Rs 20 lakh per month. Following RBI’s approval, IDBI Bank, in a meeting held on February 24, 2022, had approved Sharma’s reappointment for a period of three years from March 19, 2022, subject to the approval of the bank members.
Explaining the rationale for seeking a raise in Sharma’s salary, IDBI Bank said that 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”. He said that the bank’s promoters and stakeholders also trusted him because he was able to bring transformational changes to the bank.
“Rakesh Shamra is fit and proper to be appointed MD&CEO in accordance with the fit and proper standards issued by the RBI,” he added. The lender said Il Sharma had given his consent to be reappointed and was not disqualified from being appointed as a director to the bank’s board. Sharma has the particular qualifications, skills, experience and knowledge required for the said position. The annual remuneration payable to Sharma during his tenure is subject to the approval of the RBI, he added.
A seasoned banker with over 40 years in the banking industry, Sharma started his career at the State Bank of India and held various responsibilities in India and abroad. He moved from the position of Chief Managing Director of SBI to Lakshmi Vilas Bank as MD&CEO and served there from March 7, 2014 to September 9, 2015. He then joined Canara Bank as MD & CEO on September 11, 2015 and served for a period of three years until July 31, 2018.
RBI had placed IDBI Bank under the APC in May 2017, after passing thresholds for capital adequacy, asset quality (net NPAs were above 13% in March 2017), return on assets and leverage ratio. IDBI Bank, previously classified as a public sector bank, is now classified as a private sector lender controlled by LIC. According to the bank’s shareholding scheme as of March 31, 2022, LIC holds a 49.24% stake in the bank and the government’s stake stands at 45.48%, bringing their combined capital to 94.71%.