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RBI Holds Up Year-end Bonuses of ICICI, HDFC and Axis Bank CEOs; Questions Size of Payouts

According to the report, ICICI approved a bonus of Rs 2.2 crore for Kochhar while Axis Bank’s Shikha Sharma was set to receive Rs 1.35 crore and HDFC Bank’s Aditya Puri about Rs 2.9 crore. A comment from either of three banks or the RBI was not forthcoming.

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Updated:April 6, 2018, 4:49 PM IST
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RBI Holds Up Year-end Bonuses of ICICI, HDFC and Axis Bank CEOs; Questions Size of Payouts
Representative image. (Reuters)
New Delhi: The year-end bonus of chief executive officers of various private banks has been reportedly delayed by the Reserve Bank of India which has raised questions about whether the payouts is merited.

According to a report by Bloomberg, the RBI has questioned the size of the payouts, citing the lenders’ performance issues.

The affected CEOs include those of HDFC Bank, ICICI Bank and Axis Bank, the country’s biggest private lenders in terms of assets.

Sources told Bloomberg that the bankers are yet to receive bonuses for the financial year that ended on March 31, 2017, as the RBI hasn’t signed off on the proposed payments.

This revelation comes at a time when both ICICI Bank and Axis Bank has been hit by allegations of loan fraud, especially against ICICI CEO Chanda Kochhar.

According to the report, ICICI approved a bonus of Rs 2.2 crore for Kochhar while Axis Bank’s Shikha Sharma was set to receive Rs 1.35 crore and HDFC Bank’s Aditya Puri about Rs 2.9 crore. A comment from either of three banks or the RBI was not forthcoming.

The country’s private banks have suffered a knock on their reputation over the past one year, with multiple revelations of hidden bad loans and alleged lapses in corporate governance. They have also come at a bad time for Prime Minister Narendra Modi, who has built his reputation of being anti-graft, and his government which facing an election next year.

Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd, told Bloomberg, “We have never noticed such delay in approving the payouts, but then we haven’t seen a year in which so many skeletons were brought out of the closet -- from under-reporting of bad loans to serious governance issues.”

In the year that ended March 2017 – for which the bonuses are under contention – an RBI audit showed Axis hadn’t disclosed bad loans worth about Rs 5,600 crore. HDFC Bank also reported a divergence and ICICI said it isn’t required to make disclosures on the topic even as provisions for bad loans climbed.

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| Edited by: Ashish Yechury
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