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Payments Banks: Share-Linked Pay & Disclosure Rules Updated

Current · Source: Reserve Bank of India · official publication, rbi.org.in · ~2 min read
Quick answerRBI amends Payments Banks Governance Directions to require share-linked instruments in variable pay, fair-valued via Black-Scholes, and mandates annual remuneration disclosures for WTDs/MD&CEO/MRTs in financial statements from April 1, 2027.
The rule, in the simplest words
How it plays out — a real example

Ravi, the CFO of a payments bank, reviews the new rules. He updates the compensation policy to include employee stock options as variable pay, calculates their fair value using Black-Scholes, and ensures the expense is booked from the approval quarter. He also instructs the finance team to add a remuneration disclosure table for the MD and risk managers in the next annual report.

What changed

Paragraph 37(3)(ii)(f) now states that share‑linked instruments are to be treated as variable pay, with banks required to set grant norms in line with statutes, disclose details per the 2025 presentation directions, value them on grant date using the Black‑Scholes model, and recognise the fair value as expense from the approved accounting period. Paragraph 37(7) now requires banks to disclose remuneration of whole‑time directors, MD & CEO and material risk takers annually in their financial statements, as prescribed in the 2025 directions.

What it means for you

Payments banks must align compensation policies with statutory norms and ensure share-linked pay is valued and expensed accurately, impacting profit recognition. Annual remuneration disclosures increase transparency for stakeholders, requiring banks to update their financial reporting processes and governance frameworks.

What you must do

Who it affects

Payments banks, Whole-time directors (WTDs), Managing Director & CEO (MD&CEO), Material risk takers (MRTs), Compensation committees, Finance and compliance teams

❓ Common questions

What is the effective date of these amendments?

The amendments come into force from April 1, 2027.

How must share-linked instruments be valued?

They must be fair valued on the date of grant using the Black-Scholes model, and the fair value recognised as an expense from the accounting period of approval.

What disclosures are now required for remuneration?

Banks must disclose remuneration of WTDs, MD&CEO, and MRTs annually in their financial statements, as per the referenced RBI directions.

🧰 Tools — save, print, templates & related
Most relevant forTeller / Cashier / Customer Service OfficerPersonal Banker / Branch RM (Portfolio)Branch Sales / CASA Acquisition OfficerBranch Manager — Private Bank / SFBBranch Manager — PSU / Co-op / RRB (sanctioning powers)Branch Operations (Accounts / FD / CASA)
🛠 Banker’s toolkit — checklists & reply templates →
Who does what — compliance checklist
💻 IT / Systems
  • Prepare for effective date April 1, 2027; update systems and reporting templates accordingly.
📜 Compliance
  • Update compensation policy to include share-linked instruments as variable pay, with Black-Scholes fair valuation on grant date.
  • Recognise fair value of share-linked instruments as expense from the accounting period of approval.
  • Ensure annual financial statements disclose remuneration of WTDs, MD&CEO, and MRTs as per updated directions.
  • Review compliance with statutory provisions for grant of share-linked instruments.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Payments banks, Whole-time directors (WTDs), Managing Director & CEO (MD&CEO), Material risk takers (MRTs), Compensation committees, Finance and compliance teams), your first concrete step on “Payments Banks: Share-Linked Pay & Disclosure Rules Updated” is: “Update compensation policy to include share-linked instruments as variable pay, with Black-Scholes fair valuation on grant date.”.

  1. Circular: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13650&Mode=0 -- Payments Banks: Share-Linked Pay & Disclosure Rules Updated
  2. Issued: 31 Jul 2026, 04:18 IST
  3. Action required: Update compensation policy to include share-linked instruments as variable pay, with Black-Scholes fair valuation on grant date.
  4. Action required: Recognise fair value of share-linked instruments as expense from the accounting period of approval.
  5. Action required: Ensure annual financial statements disclose remuneration of WTDs, MD&CEO, and MRTs as per updated directions.
  6. Action required: Review compliance with statutory provisions for grant of share-linked instruments.
  7. Action required: Prepare for effective date April 1, 2027; update systems and reporting templates accordingly.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 31 Jul 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13650&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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