New compensation norms for private, financial bank honchos

New compensation norms for private, financial bank honchos

Banks should continue to formulate and adopt a comprehensive compensation policy covering all their employees and conduct annual reviews

FPJ BureauUpdated: Tuesday, November 05, 2019, 10:27 AM IST
article-image

Mumbai: The Reserve Bank issued compensation guidelines for whole-time directors and chief executives of foreign, private, small finance, payments banks and local area banks mandating the cash component of variable pay at 67 %.

Banks should continue to formulate and adopt a comprehensive compensation policy covering all their employees and conduct annual reviews, RBI said, adding the new guidelines will be effective nect April.

The regulator said if the variable pay is up to 200 % of the fixed pay, at least 50 % of it should be in non-cash, and if the variable pay is above 200 %, 67 % of it should be paid via non-cash instruments.

It also wants banks to claw-back the non-variable pay components if there is divergence in provisioning for NPAs or asset classification exceeds the prescribed threshold for public disclosure.

"The policy should cover all aspects of the compensation structure such as fixed pay, perquisites, performance bonuses, guaranteed bonuses, severance package, share-linked instruments like employee stock option plans, pension plans, and gratuity," RBI said in a notification.

Foreign banks operating under the branch mode will have to continue to submit a declaration to RBI annually from their head offices confirming that the compensation structure of those working in the country are in conformity with principles and standards set by the Financial Stability Board.

RECENT STORIES

Game-Changing Alliance: Ambani's Reliance Ventures Into Adani's Power For The First Time; Acquires...

Game-Changing Alliance: Ambani's Reliance Ventures Into Adani's Power For The First Time; Acquires...

SRM Contractors IPO Subscribed 86.57 Times On Last Day Of Bidding

SRM Contractors IPO Subscribed 86.57 Times On Last Day Of Bidding

Tax-Saving Tip From Zerodha CEO Nithin Kamath: 'If You're Married And Hindu..."; Here's How To Save...

Tax-Saving Tip From Zerodha CEO Nithin Kamath: 'If You're Married And Hindu...

Holy Cities Like Ayodhya, Varanasi Attracting Big Retail Brands: Report

Holy Cities Like Ayodhya, Varanasi Attracting Big Retail Brands: Report

A Big Relief For Byjus's: NCLT Rejects Investor Plea To Stay Byju's Rights Issue EGM On March 29...

A Big Relief For Byjus's: NCLT Rejects Investor Plea To Stay Byju's Rights Issue EGM On March 29...