Current Affairs

RBI compensation norms for Foreign, Private Banks

Current context: The RBI has issued compensation guidelines for whole-time directors, control function staff, chief executive officers of foreign, private, local area banks, small finance and
RBI compensation norms for Foreign, Private Banks
payments banks on 4th November 2019.
  • RBI has said that there should be a proper balance between fixed pay and variable pay of the directors and chief executives.
  • It has ensured that atleast 50% of the compensation should be variable and should be paid on the basis of the performance of the individual, business-unit and firm-wide measures.
  • RBI has said that if the variable pay is up to 200% of the fixed pay, at least 50% of it should be in non-cash.
  • And 67% of the variable pay will be paid in non-cash, if the variable pay is above 200% of the fixed pay.
  • The new guidelines will be effective from April 2020.
  • The RBI has taken the step to correct the misaligned compensation practices and to prevent the reckless risk-taking of directors and Chief executives that has burdened India’s lenders with record bad loans.

Question: 

Q.1 As per the recent RBI’s guidelines on the compensation of whole-time directors and chief executive officers, __________% of the variable pay will be paid in non-cash if the variable pay is above 200% of the fixed pay? 
a. 50%
b. 56%
c. 67%
d. 70%
RBI compensation norms for Foreign, Private Banks RBI compensation norms for Foreign, Private Banks Reviewed by Neha Verma on November 05, 2019 Rating: 5

No comments:

Join 8,000+ readers and get free notes in your email