RBI mulls new penalty framework for banks: Report
There is also speculation about the possibility of imposing additional capital charges on regulated entities, as per the report
The Reserve Bank of India (RBI) is considering a comprehensive review of its penalty system, Business Standard reported citing a senior regulatory source. The potential changes might involve increasing the penalty amounts, this could be in accordance with the size of the regulated entities, their importance to the system, and the number of repeat offences, it added.
Additionally, the review may explore clawback of payouts to CEOs and key management personnel (KMP), it said. This aspect, in particular, could hit state-run banks, whose compensation packages have already been under debate when considered against those offered by private banks.
There is also speculation about the possibility of imposing additional capital charges on regulated entities, as per the report.
The initiative comes as the apex bank looks to enhance corporate governance standards within regulated entities and emphasize its importance, it added.
In a meeting with the boards of state-run and private banks in May, RBI Governor Shaktikanta Das discussed governance issues, ethics, the role of boards, and supervisory expectations. This is being viewed as an extension of that focus.
