RBI issues norms on incentives of private banks' top officials

The Reserve Bank of India on Monday said the fair value of the share-linked incentives paid to chief executive officers, whole-time directors and other key functionaries by the private banks should be recognised as an expense during the relevant accounting period. The RBI has also asked all banks, including local area banks, small finance banks and foreign banks to comply with its directions for all share-linked instruments granted after the accounting period ending March 31, 2021. The central bank had issued guidelines on the compensation of whole-time directors/ chief executive officers/ material risk takers and control function staff in November 2019. The RBI issued the clarification saying "it has been observed" that banks do not recognise grants of the share-linked compensation as an expense in their books of account concurrently.