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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Review of Fixed Remuneration granted to Non-Executive Directors (NEDs)

09-Feb-2024 | RBI/2023-2024/121 DoR.HGG.GOV.REC.75/29.67.001/2023-24

Reserve Bank of India has issued circular reviewing fixed remuneration granted to Non-Executive Directors (NEDs). This circular repeals the the instructions on Guidelines on Compensation Non-executive Directors of Private Sector Banks.

By virtue of this notification the ceiling of 20 lakh in respect of remuneration of Non-Executive Directors, other than the Chair of the Board has been decided to revise to 30 lakh per annum.

1. 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.

2. 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.

3. Banks are required to make disclosure on remuneration paid to the directors on an annual basis at a minimum, in their Annual Financial Statements.
Applicability and Commencement

4. The instructions 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.

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