The draft regulations on compensation of private banks come within days of the US Congress passing a major financial reform bill to discipline firms on Wall Street.
Coincidentally, a finance ministry panel has only this week recommended better pay for chiefs of public sector banks.
In the draft, RBI has hit out at guaranteed bonuses saying they are "not consistent with sound risk management or productivity-linked principles" and proposed that they should not be a part of a compensation plan.
Bonus should only be given for hiring new staff and be limited only to the first year, the draft said.
Source: Economic Times RBI wants pay cut for pvt bankers on poor show
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By ugesh sarkar, Section Banking & RBI
Posted on Sat Jul 03, 2010 at 12:24:03 AM EST
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Executives of state-run banks are perceived to get salary packages way below those of their private sector counterparts.
Chanda Kochhar, chief of the country's largest private sector bank, ICICI Bank, received a remuneration of Rs 1.73 crore in 2009-10, as against market leader and state-run lender SBI chief OP Bhatt's Rs 26.51 lakh.
According to data for fiscal year 2009-10, the number of top executives at private sector banks getting remuneration in excess of Rs 1 crore a year is more than their counterparts in any other sector.
Top executives of 25 private sector banks, including chiefs of ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and DCB, figured among the 200-odd such persons during the year ended March 2010
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