Central Bank allows commercial banks to increase fees of board members by up to
50%
The State
Bank of Pakistan (SBP) has authorized commercial banks to raise the fees
paid to board members for attending meetings by up to 50%. This increase
applies to meetings chaired by the banking company's board.
In a circular released by the central bank,
commercial banks with assets exceeding Rs. 1 trillion or after-tax profits of
at least Rs. 5 billion are now allowed to pay as much as Rs. 1.2 million to a
director per meeting. Previously, these banks could only pay up to Rs. 0.8
million per meeting.
The SBP also revised the fee structure for banks with assets under Rs. 1 trillion and after-tax profits below Rs. 5 billion. These banks can now pay up to Rs. 0.75 million per director for attending a board meeting, up from the earlier cap of Rs. 0.5 million.
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These changes have been made through amendments
to the Corporate Governance Regulatory Framework.
Typically, banks hold four board meetings
annually. The board includes the chief executive officer, executive directors,
nominee directors, and independent directors, all of whom play a role in making
key business decisions. Some directors also oversee various board committees,
such as those focused on human resources and information technology.
Directors taking on additional responsibilities may receive extra compensation of up to 20% of their approved fees, subject to shareholder approval and proper documentation in the bank’s remuneration policy.
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The SBP has also clarified that banks will reimburse directors for their travel, accommodation, and lodging expenses related to board or committee meetings, as well as relevant domestic training, based on actual costs. Any additional expenses will be the responsibility of the director.
Board remuneration varies across banks, depending on the number of directors and the specific fee structures. In 2024, Meezan Bank paid Rs. 65.4 million to its eight board members, United Bank Limited paid Rs. 117 million to eight directors, and Standard Chartered Bank paid Rs. 28.7 million in remuneration and allowances to its directors.
Source: Pro Pakistani