The Reserve Bank of India (RBI) on February 10, 2024, issued a notification regarding the review of Fixed Remuneration granted to Non-Executive Directors
These instructions would come into force with immediate effect
The following has been stated namely: -
• This has a reference to the circular dated April 26, 2021 (Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board) where the ceiling of ₹20 lakh per annum was specified in respect of remuneration of Non-Executive Directors (NEDs), other than the Chair of the Board.
• it has been decided to revise the ceiling to ₹30 lakh per annum.
• These instructions shall be applicable to all the Private Sector Banks including Small Finance Banks and Payment Banks as also the wholly owned subsidiaries of Foreign Banks
• It states that The banks are required to have suitable criteria for granting fixed remuneration to its NEDs, with the approval of its Board before any review of the extant remuneration.
• The Board of the bank may fix a lower amount within the ceiling limit of ₹30 lakh per annum depending upon the size of the bank, experience of the NED, and other relevant factors.
•It states that the private sector banks would be required to obtain regulatory approval regarding remuneration to Part-time Chairman in terms of Section 10B(1A)(i) and 35B of the Banking Regulation Act, 1949.
• The Banks are required to make disclosure on remuneration paid to the directors on an annual basis at a minimum, in their Annual Financial Statement
[Notification No. RBI/2023-24/121 DoR.HGG.GOV.REC.75/29.67.001/2023-24]
