Bank board’s proposal on salary gets RBI shock

The Banks Board Bureau, an advisory body created by the government in April 2016, proposed recommendations on the roles, responsibilities, remuneration and service conditions of non-executive chairmen as well as the remuneration of non-executive directors in PSBs ‘to ensure that level-playing field with private sector banks is established to attract high quality personages’.

RBI proposed its Prompt Corrective Action (PCA) norms that banks, which do not meet financial parameters set by the central bank, would face restraints on compensations for Directors and CEOs. The restriction on compensation has been suggested for banks that breach the third-level threshold when it comes to equity, bad loans or profitability. Indian Overseas Bank, with NPAs of 14% has already breached the third-level threshold.