Banker bonuses delayed amid India frauds
The Reserve Bank of India hasn’t signed off on the proposed payments
India’s banking regulator is delaying year-end bonuses to the heads of top private banks as it questions the size of the payouts citing the lenders’ performance issues, said people familiar with the matter.
Chief executive officers at HDFC Bank Ltd, ICICI Bank Ltd and Axis Bank Ltd — the nation’s largest private lenders by assets — are among bankers yet to receive bonuses for the financial year ended March 31, 2017, as the Reserve Bank of India hasn’t signed off on the proposed payments, the people said, asking not to be identified as the information is private.
They declined to give further details. Business Standard newspaper had previously reported the delays.
ICICI’s board had approved a bonus of Rs22 million ($340,000, Dh1.24 million) for CEO Chanda Kochhar while Axis Bank’s Shikha Sharma was set to receive Rs13.5 million and HDFC Bank’s Aditya Puri about Rs29 million, exchange filings show. A spokesman for Axis Bank declined to comment. Spokesmen for HDFC Bank and ICICI didn’t reply to emails and phone calls. An email to the RBI wasn’t immediately answered.
Long considered healthier than their government-run peers, India’s private banks have had a tough time over the past year, plagued by revelations of hidden bad loans and alleged lapses in corporate governance. Rising defaults have enraged the public, piling pressure on Prime Minister Narendra Modi to act against the perpetrators and reinforce his anti-graft image before elections next year.
Going by historical evidence, the RBI should have approved the bonuses well before March 31, 2018, said Asutosh Kumar Mishra, a Mumbai-based banking analyst at Reliance Securities Ltd.
“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 ended March 2017 — for which the bonuses are under contention — an RBI audit showed Axis hadn’t disclosed bad loans worth about Rs56 billion. 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.
Axis Bank shares rose about 10 per cent and ICICI 17 per cent in Mumbai trading during the year ended March 2017, while the 10-member Bankex Index added 33 per cent. HDFC Bank shares jumped 35 per cent during the period.
“Private banks will likely report sharp rise in slippages, led by ICICI Bank and Axis Bank,” said analysts led by M.B. Mahesh at Kotak Institutional Equities, referring to higher delinquent loans. They predict January-March 2018 results would confirm a quarter of “pain” for Indian lenders.
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.” Asutosh Kumar Mishra | Analyst at Reliance Securities