RBI scrutinises NBFC key management payouts under new compensation policy

A key feature of the exercise will be adherence to norms on the proportion of variable pay in total compensation

Payouts to key management personnel in non-banking financial companies (NBFCs) are under the banking regulator’s scrutiny. Top industry officials said this is a follow-through on the Reserve Bank of India’s (RBI’s) circular of April 29, 2022, which asked NBFCs in the “middle” and “upper” layer of its four-tiered scale-based regulatory (SBR) framework to put in place a board-approved compensation policy. These include the setting up of a remuneration committee, principles for fixed-variable pay structures, and claw-back provisions effective April 1 last year.
 

The RBI’s annual report for FY24 also makes it explicit that among its key regulatory