Banks shall have a written Remuneration Policy for Senior Management approved by General Assembly, and a Remuneration Policy for all other employees approved by the Board of Directors. The Remuneration Policy shall ensures the achievement of prudent management of the risks associated with remuneration.
18.
The Remuneration Policy should be designed to attract and retain quality staff with sufficient knowledge, skills and expertise to effectively conduct the business of the bank.
19.
The Remuneration Policy should, inter-alia, cover the following areas:
a.
The objectives of the Remuneration system (with focus on promoting effective risk management and achieving financial soundness and stability of the bank).
b.
Scope of policy should cover all levels and categories of employees whether regular or contractual as well as outsourcing arrangements with third-party service providers.
c.
Broad structure of the Remuneration system (including but not limited to linking remuneration with performance and alignment of remuneration with risk taking).
d.
Determinants of the mix of remuneration components (including but not limited to fixed and variable components; cash, equity and other non-cash benefits).
e.
Description and details of major perquisites to be made part of the remuneration.
f.
Authority matrix clarifying management’s approval limits for remunerations and any constraints that require approval from Nomination and Remuneration Committee.
g.
A clear description of the responsibilities of the control functions, as well as human resources, related to participating in designing appropriate remuneration policies, developing performance indicators related to risk and behavior, and identifying, monitoring and reporting misconduct.
h.
Criteria to be used for determining the value for allocation of the shares in relation to remuneration.
20.
The Remuneration Policy should not be solely based on industry practices but should also take into account the business model, financial condition, operating performance and business prospects of the bank.
21.
The review of Remuneration Policy to assess its adequacy and effectiveness should be made an integral part of the bank’s risk management framework.
