March 2,2010
The Reserve Bank of India is likely to announce draft guidelines
on the compensation packages of the private sector bank
chiefs by next month, a move aimed at aligning the salary
structures with business performance.
“The indications are that the draft paper will be out by March.
This would be aimed at putting a framework in the way banks
compensate their CEOs and
other top executives,” a source in the know said.
In mid-term policy review, Reserve Bank Governor D Subbarao
had said that the apex bank was working on the principles
outlined in the Financial Stability Board for sound
compensation and will come out with norms to ensure
healthy practices in compensation policies of private and foreign banks.
The Governor had highlighted compensation practices,
especially those of bigger financial institutions,
as one of the factors that contributed to the recent global financial crisis.
In the G-20 meet last year, the world leaders expressed
concerns over the high compensation packages of top bank
executives, which, they argued was a not positive sign in a healthy financial system.
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