The Reserve Bank of India (RBI) following a review has increases the remuneration ceiling of Non Executive Directors (NEDs) of banks from ₹20 lakh per annum to ₹30 lakh to attract better talent and ensure corporate governance.
“Considering the crucial role of NEDs in efficient functioning of bank Boards and its various Committees and to further enable banks to sufficiently attract qualified, competent individuals on their Boards, it has been decided to revise the aforementioned ceiling to ₹30 lakh per annum,” the RBI said in a circular.
It said 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,” the RBI said.
The instructions are applicable to all private sector banks including Small Finance Banks and Payment Banks as also the wholly owned subsidiaries of foreign banks. The instruction has come into immediate effect.