Now, it’s easier for people joining bank boards as non-executive directors to receive higher payments.
RBI has raised the limit of remuneration for non-executive directors of banks.
Earlier the limit was up to Rs 20 lakh
As per the latest information from the Reserve Bank, banks can now pay their non-executive directors up to Rs 30 lakh every year. Before, the limit was Rs 20 lakh.
The Reserve Bank mentioned that the bank boards can decide the remuneration, which can be up to Rs 30 lakh, based on the bank’s size, the experience of the non-executive director, and other factors.
Banks will have to disclose remuneration
Banks must tell how much they pay their non-executive directors in their yearly financial reports.
Private sector banks need permission from regulators for the pay of part-time chairman.
Every bank will decide on rules for paying non-executive directors on their boards.
If there’s any change in pay for a current non-executive director, the board must approve it.
Instructions will be applicable on such banks
The Reserve Bank stated that these rules apply to all private sector banks, including small finance banks (SFBs) and payments banks.
Wholly owned subsidiaries of foreign banks must also follow these instructions. The Central Bank mentioned that these instructions are effective immediately.
Reason for the Increase
The role of non-executive directors is crucial in all banks. They are needed for the proper functioning of different committees, including bank boards.
Non-executive directors also influence the corporate governance of banks.
The Reserve Bank stated that because of their significant role, it’s important for talented individuals to step forward. That’s why they decided to raise the wage limit.
