|Kamath: Board support
Mumbai, May 27: ICICI Bank intends to ask the Reserve Bank of India to relax its 70-year age limit for bank chairmen in order to give Kundapur Vaman Kamath the opportunity to stay on as chairman of the country’s second largest commercial bank until 2019.
Kamath will turn 66 in December this year and his five-year term as chairman of the bank will end before the annual shareholders’ meeting in 2014.
So, the bank is planning to move a resolution at the annual general meeting scheduled on June 24 this year to seek approval for another five-year term for Kamath stretching from May 1, 2014 to April 30, 2019. The decision to move such a resolution was taken at a meeting of the bank’s board on April 26.
“The bank will seek the approval of the RBI for the above period and also specifically seek approval of RBI for extension of his (Kamath’s) term beyond attainment of 70 years of age and up to April 30, 2019,” the bank said in an annual 20-F filing with the Securities and Exchange Commission of the US.
“The board felt it imperative that the benefit of his expert guidance continue to be available to the executive management as well as to the board in terms of strategic leadership and governance,” ICICI Bank said.
Once the shareholders clear this resolution at next month’s AGM, the bank will approach the central bank and urge it to relax its age rule for bank chairmen.
Such a proposal has never been placed before the RBI in recent history and it is not known whether it will concede the request.
The bank also intends to raise Kamath’s remuneration from Rs 20 lakh at present to Rs 50 lakh — a jump of 150 per cent.
The bank will also move a resolution seeking shareholders’ approval for a five-year extension for managing director and CEO Chanda Kochhar from April 1, 2014 to March 31, 2019.
It also proposes to raise the salary of Chanda Kochhar from the current range of Rs 7 lakh to Rs 13.5 lakh to a salary band of Rs 13.5 lakh to Rs 26 lakh — effectively doubling her salary band. Kochhar currently draws a monthly salary of Rs 12.7 lakh which will rise to Rs 14.61 lakh from April 1, 2013.
Kochar also gets a supplementary monthly allowance of Rs 8.7 lakh at present, which will rise to just over Rs 10 lakh under the new plan.
Kamath has played a major role in transforming ICICI from a development financial institution that was established in 1955 into various financial service activities in the mid-nineties and then aggressively turned it into the second largest bank behind the State Bank of India.
“As the approval of members is being sought up to April 30, 2019, the bank would seek the approval of RBI for the above period and also specifically seek approval of RBI for extension of his term beyond attainment of 70 years of age and up to April 30, 2019,” ICICI Bank told its shareholders in its annual report for 2012-13.
The bank explained that it is under Kamath’s leadership that the ICICI Group transformed itself into a diversified, technology-driven financial services group that has leadership positions across banking, insurance and asset management in India, and an international presence.
“He has made an immense contribution to the growth and development of the bank and the board felt it imperative that the benefit of his expert guidance continue to be available to the executive management as well as to the board in terms of strategic leadership and governance,” ICICI Bank added.
Mangalore-born Kamath, joined the project finance division of ICICI (then a financial institution) as a management trainee in 1971. In 1988, he moved to the Asian Development Bank and spent several years in Southeast Asia before returning to ICICI as its managing director & CEO in 1996. He played a key role in transforming the entity into a successful commercial bank and tapped the huge potential of the retail individual.
Kamath has also mentored some of the most respected names in the world of financial services. Besides Kochhar, these include Kalpana Morparia, CEO of JP Morgan India and Shikha Sharma who is now the CEO of Axis Bank. Another protégé is V. Vaidyanathan, chairman & managing director of Capital First, the non-banking finance company earlier known as Future Capital Holding.
Kamath is also non-executive chairman of Infosys Ltd and director of Schlumberger Ltd.
ICICI Bank recently reported a total income of Rs 22,212 crore in the year ended March 31 — an increase of almost 22 per cent over the Rs 18,236 crore last year. It earned a net profit Rs 8,325 crore, a 28.7 per cent increase over the Rs 6,465 crore last year.
Its loan book swelled 14.4 per cent to Rs 2,90,200 crore from 2,53,700 crore last year.