The RBI Monday proposed that at least 50 per cent of compensation of senior officials of private and foreign banks, including whole time directors and chief executive officers, "should be variable".
A discussion paper on proposed guidelines for compensation of whole time directors/chief executive officers/material risk takers and control function staff issued by the central bank also said ESOPs should be included as a component of variable pay.
In January 2012, the Reserve Bank had issued the compensation guidelines for implementation by private sector and foreign banks from the financial year 2012-13.
"These (2012) guidelines are being reviewed, with an objective to better align with FSB (Financial Stability Board) Principles and Implementation Standards, based on experience and evolving international best practices," the RBI said while inviting comments from stakeholders by March 31.
The proposed guidelines, to be effective from the ensuing financial year (post issue of the final guidelines), further said, "Variable pay is to be capped at 200 per cent of fixed pay."
Disclaimer: No Business Standard Journalist was involved in creation of this content