RBI raises ceiling on remuneration of non-executive directors to Rs 30 lakh

Feb 9, 2024

Synopsis
The Reserve Bank's instructions on review of fixed remuneration for non-executive directors (NEDs) come into force immediately. The instructions apply to all private sector banks, small finance banks, payment banks, and wholly owned subsidiaries of foreign banks.

The Reserve Bank on Friday raised the ceiling on remuneration of non-executive directors in private banks to Rs 30 lakh per annum from Rs 20 lakh. In April 2021, the central bank had fixed the ceiling of remuneration at Rs 20 lakh per annum for NEDs (non-executive directors).

"Considering the crucial role of NEDs in efficient functioning of bank boards and its various committees and in order to further enable the banks to sufficiently attract qualified competent individuals on their boards, it has been decided to revise the aforementioned ceiling to Rs 30 lakh per annum," it said in a statement.

RBI further said the banks are required to have suitable criteria for granting fixed remuneration to its NEDs, with the approval of their boards before any review of the extant remuneration.

"The board of the bank may fix a lower amount within the ceiling limit of Rs 30 lakh per annum depending upon the size of the bank, experience of the NED and other relevant factors," it said.

The instructions on review of fixed remuneration granted to NEDs would be applicable to all the private sector banks including small finance banks (SFBs) and payment banks (PBs) as also the wholly owned subsidiaries of foreign banks.

The instructions come into force with immediate effect, the RBI said.

[The Business Standard]