Reserve Bank of India (RBI) has decided to revise the remuneration ceiling limit for non-executive directors of some categories of banks to Rs 30 lakh per annum from Rs 20 lakh earlier.
The revised cap will take effect immediately. In addition to private banks, the norms are also applicable to small finance banks, payment banks, and the wholly owned subsidiary of foreign banks.
In a notification on Friday, RBI said that the revision has been made in consideration of the crucial role of non-executive directors in efficient functioning of bank boards and its various committees. Further, it aims to enable banks to sufficiently attract qualified competent individuals on their boards.
The banks must have suitable criteria for granting fixed remuneration to its non-executive directors, 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 Rs 30 lakh per annum depending upon the size of the bank, experience of the non-executive directors and other relevant factors.
Private banks must obtain regulatory approval regarding remuneration to part-time chairman in accordance with banking regulation norms.
“Banks are required to make disclosure on remuneration paid to the directors on an annual basis at a minimum, in their Annual Financial Statements,” the notification said.