RBI hikes NED remuneration cap to ₹30 lakh per annum
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2023-24/121 · issued 09 Feb 2024 · ~2 min read
Quick answerRBI has raised the maximum fixed remuneration for Non-Executive Directors (NEDs) of private sector banks, SFBs, payment banks, and foreign bank subsidiaries from ₹20 lakh to ₹30 lakh per annum, effective immediately.
What changed
The ceiling on fixed remuneration for Non-Executive Directors (NEDs), excluding the Board Chair, has been increased from ₹20 lakh to ₹30 lakh per annum. Banks must now set criteria for granting this remuneration with Board approval, and the Board may fix a lower amount based on factors like bank size and NED experience. The earlier 2015 guidelines on NED compensation have been repealed.
What it means for you
This revision allows banks to offer higher fixed pay to attract and retain qualified NEDs, strengthening board governance. Banks must ensure Board-approved criteria are in place before any review of existing remuneration. Private sector banks still need RBI approval for Part-time Chairman remuneration under the Banking Regulation Act.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update board-approved policy for NED fixed remuneration with clear criteria (e.g., bank size, NED experience).
Ensure any review of existing NED remuneration is preceded by Board approval of the criteria.
For private sector banks, continue to seek RBI approval for Part-time Chairman remuneration as per Section 10B(1A)(i) and 35B of the Banking Regulation Act, 1949.
Disclose annual remuneration paid to directors in the Annual Financial Statements.
Who it affects
Private sector banks, Small Finance Banks (SFBs), Payment Banks (PBs), Wholly owned subsidiaries of foreign banks in India, Non-Executive Directors (NEDs) of these banks
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 03:46 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does the new ₹30 lakh cap apply to the Board Chair as well?
No, the revised ceiling of ₹30 lakh per annum applies only to Non-Executive Directors other than the Chair of the Board. Remuneration for Part-time Chairmen in private sector banks still requires separate RBI approval.
Can a bank pay less than ₹30 lakh to its NEDs?
Yes, the Board may fix a lower amount within the ₹30 lakh ceiling, considering factors like the bank's size, the NED's experience, and other relevant criteria.
When does this circular take effect?
The instructions come into force with immediate effect from the date of the circular, February 9, 2024.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #140: DoR.HGG.GOV.REC.75/29.67.001/2023-24 — "Review of Fixed Remuneration Granted to Non-Executive Directors (NEDs)" dated February 9, 2024”
📜 Read the original circular — full text as issued by RBI
RBI/2023-24/121
DoR.HGG.GOV.REC.75/29.67.001/2023-24
February 9, 2024
Dear Sir/ Madam
Review of Fixed Remuneration granted to Non-Executive Directors (NEDs)
Please refer to paragraph 9 of circular dated April 26, 2021 ( Corporate Governance in Banks - Appointment of Directors and Constitution of Committees of the Board ) as per which ceiling of ₹20 lakh per annum was specified in respect of remuneration of Non-Executive Directors (NEDs), other than the Chair of the Board.
2. Considering the crucial role of NEDs in efficient functioning of bank Boards and its various Committees and in order to further enable the banks to sufficiently attract qualified competent individuals on their Boards, it has been decided to revise the aforementioned ceiling to ₹30 lakh per annum.
3. The banks are required to have suitable criteria for granting fixed remuneration to its NEDs, with the approval of its Board before any review of the extant remuneration. The Board of the bank may fix a lower amount within the ceiling limit of ₹30 lakh per annum depending upon the size of the bank, experience of the NED and other relevant factors.
4. As hitherto, private sector banks would be required to obtain regulatory approval regarding remuneration to Part-time Chairman in terms of Section 10B(1A)(i) and 35B of the Banking Regulation Act, 1949.
5. Banks are required to make disclosure on remuneration paid to the directors on an annual basis at a minimum, in their Annual Financial Statements.
Applicability and Commencement
6. The instructions would be applicable to all the Private Sector Banks including Small Finance Banks (SFBs) and Payment Banks (PBs) as also the wholly owned subsidiaries of Foreign Banks. The instructions would come into force with immediate effect.
Power exercised
7. The instructions have been issued in exercise of powers conferred by Section 35B of the Banking Regulation Act, 1949.
Repeal
8. The instructions on Guidelines on Compensation of Non-executive Directors of Private Sector Banks issued vide circular DBR.No.BC.97/29.67.001/2014-15 dated June 1, 2015 stand repealed.
Yours faithfully
(Scenta Joy)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/121 · issued 09 Feb 2024. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12607&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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