CEO pay can transform banks

Compensation structures can be designed to make risk management a core part of Indian banks' strategic decision making and planning processes

When, in February 2019, the Reserve Bank of India (RBI) published a discussion paper on proposed compensation guidelines for senior management and material risk-takers in Indian banks, the debate was focused on how this would constrain CEO compensation. What may not have received due attention was how such a proposal, if implemented appropriately, can transform Indian banking. 

It can make risk management a core part of a bank’s strategic decision-making and planning process, as opposed to the peripheral position it now occupies. Risk-related projections in some cases tend to come out as an after-thought to assess the growth planning exercise.

Previously, in