In the last financial year, HDFC Bank paid more than ₹1,500 crore to its
employees as ex-gratia, which means a special bonus given as a “thank you.”
This was one of the biggest one-time payouts ever made by an Indian private bank.
The bonus was announced soon after HDFC Ltd merged with HDFC Bank, one of the
largest mergers in India’s corporate history. The bank said the payment was a
way to appreciate and reward employees who worked hard to complete the
complicated merger process.
At first, the announcement was widely praised. Many people in the
corporate world saw it as a generous gesture and a sign that the bank
valued its staff.
However, employees later realised there was a major catch:
The entire ex-gratia amount is fully taxable.
This means that a large part of the bonus would go straight to
taxes, and employees would receive much less money in hand than
they expected. As a result, the bonus that was meant to be a reward
ended up feeling disappointing to many staff members.