IDBI Bank has offered to boost the salary of Rakesh Sharma, who helped bring the bank out of the RBI’s PCA framework, by nearly 10.
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 has 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 another three years beginning March 19, 2022.
The bank proposes for the approval of the members to transact special business by mail-in ballot only by way of electronic voting, to consider and, if deemed appropriate, to pass an ordinary resolution for the reappointment of Rakesh Sharma as a non-rotating director. and Managing Director and Chief Executive Officer (MD&CEO) for a term of three years beginning 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 ₹2,400,000 for the financial year 2022-23, to be approved by the RBI,” IDBI said. Bank in the folder.
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 salary and perquisite revisions 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 receives a salary of ₹2.64 lakh per month while the bank has offered to raise the salary to around ₹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 he Sharma has given his consent to be reappointed and is 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 rose from the position of Chief Managing Director of SBI at 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. Within Canara Bank, he also held the position of Chairman of Group Companies Canara Bank.
He then joined IDBI Bank as MD & CEO effective October 10, 2018 and continues to be MD & CEO.
In March 2021, the RBI removed IDBI Bank from its Enhanced Regulatory Oversight or Prompt Corrective Action (PCA) framework after a gap of nearly four years on improving its financial performance.
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%.
April 15, 2022