KATHMADU, APR 05 - 2013
Staffers of banks and financial institutions will not take home salaries less than that of government employees in the same position, if the Nepal Rastra Bank’s ( NRB ) new guideline is put in place.
Once the salary guideline comes into effect, the lowest-ranked BFI staffer will get a monthly remuneration of at least Rs 10,320 — an amount equivalent to what the lowest-ranked civil service employee gets as per the government-set salary scale for civil servants last year.
The central bank is coming up with the new guideline amid complaints about a huge gap between the salaries of the top-level executive (CEO) and junior staff. Particularly, there are complaints that the junior staff are not being paid “justifiably”.
The guideline also seeks to maintain the gap between the salaries of top- and junior-level staff at a “justified level”, according to NRB sources. “The main objective of this plan is to reduce the gap between the salaries of the chief executive officer and other employees,” said a senior NRB official. “The plan is likely to come next week.”
The central bank had planned to introduce the BFI staff salary guideline when it introduced another guideline on BFI CEOs’ remunerations three years ago. But the plan was aborted due to divergent views within the central bank. “It has been a long since we started working on the guideline, and now we have reached the final stage,” said another NRB official.
The Insurance Board’s (IB) recent move to set the criteria on the difference between the salaries of the CEO and junior staff at insurance companies also encouraged the central bank to act fast on the matter. “The IB’s guideline, of course, pressed us to introduce this plan soon,” said the NRB official.
Introducing a directive on good governance, the IB has provisioned that the salary of the chief executive should not be more than 15 times the salary of the junior-most staff.
The central bank plans to implement the guideline in commercial banks, development banks and finance companies, while leaving micro-finance institutions. “Being small entities with limited transactions, implementing the plan in micro-finance institutions may not be practical,” said the second NRB official.
Amid global concerns about high executive compensation after the 2008-09 financial crisis, the NRB had fixed the salary scale for BFI CEOs in 2010. As per the remuneration guidelines, a commercial bank CEO’s annual compensation should be 5 percent of the total average expenses for all employees in the last three years or 0.025 percent of total assets of the bank maintained in the previous year, whichever is lower.
As for the remuneration of CEOs of B, C and D class financial institutions, the central bank has been flexible. The salaries of B, C and D class FIs’ CEOs should be fixed based on the financial status of FIs in the last three years, also taking into consideration components such as return on equity, size of business, operating profit, future outlook, existing risks in FIs and academic qualification, experiences and leadership quality.
Source: The Kathmandu Post
Staffers of banks and financial institutions will not take home salaries less than that of government employees in the same position, if the Nepal Rastra Bank’s ( NRB ) new guideline is put in place.
Once the salary guideline comes into effect, the lowest-ranked BFI staffer will get a monthly remuneration of at least Rs 10,320 — an amount equivalent to what the lowest-ranked civil service employee gets as per the government-set salary scale for civil servants last year.
The central bank is coming up with the new guideline amid complaints about a huge gap between the salaries of the top-level executive (CEO) and junior staff. Particularly, there are complaints that the junior staff are not being paid “justifiably”.
The guideline also seeks to maintain the gap between the salaries of top- and junior-level staff at a “justified level”, according to NRB sources. “The main objective of this plan is to reduce the gap between the salaries of the chief executive officer and other employees,” said a senior NRB official. “The plan is likely to come next week.”
The central bank had planned to introduce the BFI staff salary guideline when it introduced another guideline on BFI CEOs’ remunerations three years ago. But the plan was aborted due to divergent views within the central bank. “It has been a long since we started working on the guideline, and now we have reached the final stage,” said another NRB official.
The Insurance Board’s (IB) recent move to set the criteria on the difference between the salaries of the CEO and junior staff at insurance companies also encouraged the central bank to act fast on the matter. “The IB’s guideline, of course, pressed us to introduce this plan soon,” said the NRB official.
Introducing a directive on good governance, the IB has provisioned that the salary of the chief executive should not be more than 15 times the salary of the junior-most staff.
The central bank plans to implement the guideline in commercial banks, development banks and finance companies, while leaving micro-finance institutions. “Being small entities with limited transactions, implementing the plan in micro-finance institutions may not be practical,” said the second NRB official.
Amid global concerns about high executive compensation after the 2008-09 financial crisis, the NRB had fixed the salary scale for BFI CEOs in 2010. As per the remuneration guidelines, a commercial bank CEO’s annual compensation should be 5 percent of the total average expenses for all employees in the last three years or 0.025 percent of total assets of the bank maintained in the previous year, whichever is lower.
As for the remuneration of CEOs of B, C and D class financial institutions, the central bank has been flexible. The salaries of B, C and D class FIs’ CEOs should be fixed based on the financial status of FIs in the last three years, also taking into consideration components such as return on equity, size of business, operating profit, future outlook, existing risks in FIs and academic qualification, experiences and leadership quality.
Source: The Kathmandu Post
1 comment:
not a necessary move by NRB.
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