Reserve Bank of India aligns small finance bank remuneration disclosures with Basel Pillar 3 from April 2027

The Reserve Bank of India amended its governance requirements for small finance banks to align disclosures on share-linked compensation and senior employee remuneration with the Basel Pillar 3 requirements in its capital adequacy directions. The amendments take effect April 1, 2027. Share-linked instruments must form part of variable pay and be governed by a bank’s compensation policy in accordance with relevant statutory provisions. Banks must disclose grants under the applicable capital adequacy disclosure requirements, value them at the grant date using the Black-Scholes model and recognize the fair value as an expense beginning in the accounting period for which approval was granted. They must also disclose remuneration for whole-time directors, the managing director and chief executive officer, and material risk takers at least annually in their annual financial statements.