NRB Tightens Executive Pay: Nepal's Central Bank Introduces Strict Capping and Performance Metrics for BFI CEOs

In a sweeping regulatory move to bring transparency and discipline to corporate executive compensation, Nepal Rastra Bank (NRB) has introduced the 'Guidelines on Salary, Allowances, and Other Benefits of Chief Executive Officers of Banks and Financial Institutions, 2083'. To eliminate disparity and foster governance, the central bank mandates that the board of directors of each bank form a three-member recommendation committee led by an independent director. This committee will evaluate executive packages objectively, factoring in the CEO's qualifications, institutional returns, operating profits, and pay gaps relative to lower-tier staff. Furthermore, fixed annual remuneration has been firmly capped using minimum threshold comparisons of total asset percentages and average multi-year employee expenditures across commercial banks, development banks, finance companies, and microfinance institutions.