The State Bank of Pakistan (SBP) has increased by 50 percent the maximum limit on remuneration paid to directors for attending board or committee meetings.
The amendment has been made through a revision to Rule G-14 (2)(v) of the Corporate Governance Regulatory Framework, which sets the criteria for categorizing banks and Development Finance Institutions (DFIs) and determines the ceiling for directors’ meeting fees. The criteria used to classify banks and DFIs under the first category have also been revised.
Previously, under the first category, if an institution’s assets exceeded Rs500 billion or its after-tax profit was more than Rs1 billion—based on the latest audited annual accounts—directors could be paid a maximum of Rs800,000 per board or committee meeting.
Under the updated criteria, banks and DFIs with assets exceeding Rs1 trillion or after-tax profits above Rs5 billion (based on the latest audited annual accounts) may now pay directors up to a maximum of Rs1.2 million per board or committee meeting.
The second category includes institutions that do not meet the revised first-category criteria, or whose assets are below Rs1 trillion or after-tax profits are below Rs5 billion. Such institutions are now allowed to pay directors up to Rs750,000 per meeting. Previously, the limit for this category was Rs500,000 per meeting.
According to the State Bank of Pakistan, these limits represent the maximum permissible remuneration for attending board or committee meetings. All banks and DFIs may determine the remuneration of their board members (including the chairman) in line with their governance structure and by considering directors’ responsibilities and level of expertise, provided the payments remain within the prescribed maximum limits.
Under the Corporate Governance Regulatory Framework, the SBP has already instructed banks and financial institutions that executive directors shall not be paid any remuneration other than regular TA/DA, and that remuneration must be fixed in Pakistani rupees. However, where required, foreign directors may be paid in an equivalent foreign currency.
When determining remuneration for a director (including the chairman) for attending board and/or committee meetings, compliance with the maximum limits issued by the SBP is mandatory.
In line with SBP directives, banks and DFIs are also required to develop a fair, transparent, and robust remuneration policy for their senior management, which must be approved by the board.
