SBP ups remuneration limits by 50pc

RIZWAN BHATTI

KARACHI: The State Bank of Pakistan (SBP) has increased the maximum remuneration limits for directors attending board or committee meetings by 50 percent.

The revision has been made through an amendment to Regulation G-14 (2)(v) of the Corporate Governance Regulatory Framework, which outlines the criteria for categorizing banks and DFIs and sets the ceiling for directors’ meeting remuneration.

Under the first category, the parameters used to classify banks and DFIs have also been revised. Previously, directors were eligible to receive up to Rs 800,000 for attending a Board or Committee meeting if the institution had assets above Rs 500 billion or after-tax profit exceeding Rs 1 billion, based on the last audited annual accounts.

Under the updated criteria, banks and DFIs with assets above Rs 1 trillion or after-tax profit exceeding Rs 5 billion (as per the last audited annual accounts) may now pay directors up to Rs 1.2 million per Board or Committee meeting. For the second category, institutions that do not meet the new first-category thresholds, or have assets below Rs 1 trillion or after-tax profit below Rs 5 billion, may pay a maximum of Rs 750,000 to the director for attending a meeting. Previously, the ceiling for this category was Rs 500,000 per meeting.

According to the SBP, these limits are the maximum remuneration limits for attending a board/Committee meeting. All banks/DFIs may determine remuneration of their board (including the Chairman) taking into consideration their own governance structure and the level of responsibility & expertise of the directors while remaining within the maximum limits.

The SBP, in its Corporate Governance Regulatory Framework, has already directed the banks and financial institutions that no remuneration shall be paid to the Executive Directors except usual TA/DA as per the standard rules and regulations and remuneration shall be fixed in Pakistani rupees (PKR) invariably; nevertheless, payment of the same can be made to foreign directors in equivalent foreign currency(ies), where necessary.

While determining remuneration of a director (including the Chairman) for attending a board and/or its committee meeting(s), maximum limits issued by the SBP shall be followed:

As per the SBP directives, banks and DFIs are required to develop for a fair, transparent and sound compensation policy, duly approved by the board, for their senior management that is aligned with risks, responsibilities and key performance indicators of the institution.