News: Non-executive directors: RBI issues compensation norms for PBS

Benefits & Rewards

Non-executive directors: RBI issues compensation norms for PBS

The upper ceiling for such compensation is fixed at Rs.1 million a year for a director.

The Reserve Bank of India (RBI) has come out with guidelines on compensation to non-executive directors of private sector banks. Under the guidelines, issued on Monday, the board of directors of such banks must, in consultation with its remuneration committee, formulate and adopt a comprehensive compensation policy for non-executive directors (other than the part-time non-executive chairman). While doing so, the board should ensure compliance with the provisions of the Companies Act, 2013. The guidelines also allow the board the discretion to provide for in the policy payment of compensation in the form of profit-related commission to the non-executive directors (other than the part-time Chairman). This is, however, subject to the bank making profits. The upper ceiling for such compensation is fixed at Rs.1 million a year for a director. In addition to the directors’ compensation, the banks are allowed to pay sitting fees to the non-executive directors and reimburse their expenses for participation in the board and other meetings, subject, of course, to compliance with the provisions of the Companies Act, 2013. As has been the practice, banks in private sector would have to obtain prior approval of RBI for granting remuneration to the part-time non-executive Chairman.

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Topics: Benefits & Rewards, #National, #HRInsights

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