JOIN USCOVID-19 lockdown effect: Kotak Bank to cut 10% pay
Private sector lender Kotak Mahindra Bank has decided to cut packages of employees earning more than Rs 25 lakh a year by 10% in the wake of the ongoing coronavirus pandemic and the consequent lockdown in the country.
However, the bank decided not to cut the salaries of the employees earning below Rs 25 lakh a year. "Friends, like Uday (Kotak) said in late March 20, we are in uncharted waters. Only time will tell how we as a firm, as an economy, as a country, as a world, as humanity, emerge from this momentous event," the bank's human resources department said in a letter to its employees.
Kotak, who happens to be Asia's richest banker, had earlier decided to forego almost his entire salary and take home a nominal salary of Rs 1 for the year in a bid to battle the business uncertainty arising out of the lockdown. As part of the plan, the Kotak Leadership Team voluntarily surrendered 15% of their pay for 2020-21.
The bank, at the group level, has over 60,000 employees in its payrolls. In 2018-19, the bank paid Rs 3,159 crore as employee cost – one-fifth of its total income.
The country had been seeing a phased lockdown from March 25 – the third phase of which will end on May 17. However, banks – considered as essential services – have been allowed to operate at reduced strength.
The lockdown has crippled most of the economy, with supply chains getting disturbed. Many expect this to increase the defaults on debt once the Reserve Bank's moratorium is lifted, threatening the balance sheets of various banks. The banks also expect a hit on the profitability as idle funds of the banks have surged to all-time highs after a slump in credit demand.