In April, 2021, RBI had fixed the remuneration limit for non-executive directors at Rs 20 lakh per annum. But, now this limit has been increased to Rs 30 lakh.
The Reserve Bank of India on Friday increased the limit of remuneration of non-executive directors in private banks from Rs 20 lakh to Rs 30 lakh per year. The Central Bank (RBI) had fixed the remuneration limit for non-executive directors at Rs 20 lakh per annum in April 2021.
“In view of the important role of non-executive directors in the efficient functioning of bank boards of directors and its various committees and to enable banks to adequately attract qualified competent individuals to their boards,” the RBI said in the statement. It has been decided to revise the above limit to Rs 30 lakh per year.”
How will remuneration be decided?
The central bank said banks need to put in place appropriate norms for paying fixed remuneration to their non-executive directors with the approval of their boards of directors before any review of the existing remuneration.
“The board of directors of the bank may decide the amount within the maximum limit of Rs 30 lakh per annum depending on the size of the bank, experience of the non-executive director and other relevant factors,” RBI said.
The instructions to review fixed remuneration paid to Non-Executive Directors will also be applicable to all private sector banks including Small Finance Banks (SFBs) and Payments Banks (PBs) and wholly owned subsidiaries of foreign banks. These orders have come into effect with immediate effect.