Bangalore, March 25: The board of Indian Institute of Management, Bangalore, today approved a fee hike that will make a student pay Rs 4 lakh in his first year and a lakh more the next.

The hike, which will make the Bangalore institute the most costly IIM to study in, comes within a year of the last hike. On March 26, 2007, the IIM had increased its fees from Rs 1.75 lakh to Rs 2.5 lakh.

The IIMs can independently decide their fees and the Bangalore B-school’s board felt this was the right time to increase it for the post-graduate programme. “We have to bridge the gap between how much we spend on an average on a student and how much we take as fees. The gap has to narrow down. If our students are getting offers in excess of Rs 15 lakh per annum, it’s fair that we charge higher fees,” faculty member Amarnath Krishnaswami said.

Institute director Pankaj Chandra announced the hike after a board meeting today. “These students who would be going into the second year will have to pay Rs 5 lakh as fees,” he said.

The B-school board is headed by industrialist Mukesh Ambani.

The IIMs in Ahmedabad and Calcutta charge Rs 3 lakh a year. The Calcutta institute raised its fees by Rs 1 lakh last month.

“Infrastructure costs are spiralling. There is little else we can do,” Chandra said.

Sources told The Telegraph that the Bangalore board members were deeply divided over the hike, especially because it came just a year after the last one for the current 2007-09 batch.

Last year, Prakash Apte, the then Bangalore institute director had said the hike was inevitable.