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Pandemic effect: Kotak Mahindra bank declares 10% salary cut off with staff over 25 lakh p.a.

Due to pandemic and lockdown since many days, Kotak Mahindra Bank has decided to cut salaries by 10% for employees earning over ₹25 lakh per year, an internal communication of the bank said.

According to the bank, COVID-19, which has wreaked havoc on the economy, will in turn impact financial services firms like the bank.

“We have decided on a 10% reduction in cost to company (CTC) for all colleagues with a salary of more than ₹25 lakh per annum, with effect from May 2020 for FY21. Employees earning less than ₹25 lakh per annum will not be impacted," the private sector lender said.

On 29 March, the bank had committed ₹25 crore towards the Prime Minister’s Citizen Assistance and Relief in Emergency Situations (PM Cares) fund. Separately, Uday Kotak, Chief Executive of the bank, committed another ₹25 crore to the fund.

“Hence, we too need to re-calibrate our costs and operations, well in advance, to ensure sustainability of our businesses. We need to ensure that our colleagues are safe and do our best to protect their jobs," the memo said.

"To this end, we will recall, the Kotak Leadership Team voluntarily surrendered 15% of our pay for 2020-21, and Uday Kotak chose to take only a token salary for the year."

According to the bank, what seemed like a two or three month phenomenon in the beginning has turned out to be a pandemic with serious implications on both lives and livelihood.

“More importantly, it is increasingly clear that the pandemic is not going away anytime soon," the bank said. The memo said 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".