MUMBAI : India’s highest-paid banker isn’t Sashidhar Jagdishan, chief of the country’s largest private lender, HDFC Bank Ltd. That title goes not to Rajeev Jain, the CEO of Bajaj Finance Ltd, India’s largest non-bank, but to Abhay Bhutada, the recently retired chief of Pune-based Poonawalla Fincorp Ltd. Shadow banks such as Poonawalla Fincorp and Bajaj Finance have been able to shower their bosses with hefty salaries, bonuses and stock options as they reap the rewards of robust business growth.
This has been possible also because the CEO salaries of non-banking financial companies are outside the purview of India’s banking regulator. But that may be about to change. The average salaries of the CEOs of shadow banks increased more than that of their peers at private banks, according to a Mint analysis of annual reports for fiscal year 2022-23 and those published so far for 2023-24.
This has the Reserve Bank of India worried, and it may bring the salaries of key managerial personnel at NBFCs under its oversight, as per a Business Standard report. While this couldn’t be independently established, RBI had signalled similar intentions earlier, asking NBFCs to establish a board-approved compensation policy. “RBI has not gone into NBFC compensation because the salaries of a majority of the NBFCs are not a worry.
In exceptional cases, RBI can have supervisory discussions," said R. Gandhi, a former RBI deputy governor. “Also, NBFCs are under the RBI Act, which does not have a direct provision relating to regulating the compensation of CEOs." Also read | Yes Bank’s turnaround: Prashant Kumar has a new mission NBFCs, understandably, are perturbed about the possibility of RBI intervention in their pay structure.
Read more on livemint.com