On November 5, 2019, India’s central banking institution, the Reserve Bank of India (RBI) has released new rules relating to the pay scales of full-time directors, Chief Executive Officers (CEOs) and Material Risk Takers and Control Function staff of foreign, private, small finance, payment banks and local area banks. These new guidelines will come into effect from April,2020.
Key Points:
i.The above category banks should adopt the overall pay system for all their employees and should also review it yearly.
ii.If the non-payment is up to 200 % of the fixed salary, then at least 50 % of it should be paid in other than cash mode. If non-cash pay exceeds 200 %, then 67 %of it should be paid in non-cash ways.
iii.As per the norm, whatever policy the above category banks adopt,the policy will cover all aspects of compensation structure such as fixed salary, performance bonus , Share-linked instruments like Guaranteed Bonus, Employee Stock Option Scheme, Pension Plan, Gratuity will also be included.
iv.Foreign banks working through the branch will have to continue to submit a declaration from their head offices to the RBI every year. It should have the knowledge of principles set by the Stability Board(FSB).
v.The board of directors of banks should form a ‘Nomination and Remuneration Committee’ (NRC) of the board to oversee the framing, review and implementation of compensation policy of the bank on behalf of the board.
About RBI:
Headquarters- Mumbai, Maharashtra
Formation- 1 April 1935
Governor- Shaktikanta Das
Deputy Governors- 4 (BP Kanungo, N S Vishwanathan, and Mahesh Kumar Jain, 1 is yet to be appointed).
