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Salary gap; NRB seeks bankers’ say
KATHMANDU, AUG 07 -
Nepal Rastra Bank (NRB) has sent a letter to Nepal Bankers’ Association (NBA), seeking the latter’s suggestion on the salary difference between the chief executive and low-level staff of banks.
The central bank’s move comes two weeks after it unveiled the new monetary policy that has talked to ‘manage’ perks and benefits of directors, chief executive officers and other top management officials compatible with the country’s financial system and also make it transparent.
The NRB letter sent on Friday to the NBA has sought bankers’ suggestion on the gap to be maintained between the salaries of CEOs and bottom-level staffs.
“The letter has sought suggestions of the bankers on the salary difference between the chief
executive and low-level staffs,” said Rajan Singh Bhandari, vice-president of NBA. “The NBA will send a reply after holding discussions with its members .”
Following the global financial crisis, perks and salary of CEOs of big companies including that of banks were greatly debated in the West. The issue of a CEO’s salary surfaced in Nepal last year when the central bank said it is for capping the bank’s chief executive salary.
The central bank is of the view that the ceiling on the salary and benefits of CEOs is required to control the current practice of paying hefty amount even when the bank concerned is not very sound.
Last September, the central bank had initiated homework for introducing a set of guidelines to put a cap on perks and benefits of CEOs of banks and financial institutions (BFIs).
The trend of giving huge salary to chief executives and other top management officials was putting pressure on the bank management, especially the new banks, to increase earnings by investing in unproductive sectors.
According to a banker, the perks and salary of a CEO of a commercial bank ranges from Rs 500,000 to Rs 1.5 million a month, while the average salary of office assistants of banks is Rs 10,000.
This shows that the salary of the CEO is 15 times higher than that of the assistant level staff. Bankers also admit that there is a difference of 2-3 times in the salaries of chief executives and second men.
There is a provision that banks should inform the central bank about the salary and benefits of the chief executive. Of late, the central bank has shown concern over the salary and benefits of other top officials of banks. The central bank had sought information on salaries of assistant general managers around a month ago.
“The intent of the letter is not to control bank and financial institutions,” said a top-level NRB official. “This is an effort to reduce the risks associated with the trend of handing out high salary and benefits.”
According to central bank sources, discussion is on in the central bank that if a certain salary could be fixed and the rest of the benefits could be tied up with the risks.
Khatiwadaspeak
KATHMANDU: NRB governor Yubaraj Khatiwada on Saturday said the salary and benefits of chief executive officers (CEOs) of the Nepali banking community could come down significantly if foreigners were also allowed to compete here. “People who have retired from top jobs in various South Asian banks are approaching the NRB to head Nepali banks for a monthly salary of Rs. 300,000-Rs. 400, 000,” he said, speaking at an interaction on monetary policy organised by the Nepal Finance Companies’ Association.
At a time when bankers are complaining about the monetary policy’s provision with regard to possible cap on salary and benefits of CEOs,
the central bank chief said the NRB was protecting the jobs of Nepali bankers.
Posted on: 2010-08-08 07:39
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