SBP Allows 50% Rise in Fees for Bank Board Directors’ Meetings

The State Bank of Pakistan (SBP) has allowed commercial banks to increase board members’ meeting fees by up to 50 percent for each meeting held under the chairmanship of the banking company. According to a circular issued by the central bank, commercial banks with assets exceeding Rs. 1 trillion or after-tax profits of at least Rs. 5 billion may now pay up to Rs. 1.2 million to a director for attending a single board meeting. Previously, banks falling under this category were allowed to pay up to Rs. 0.8 million per meeting. The SBP has also revised remuneration limits for directors of banks with assets below Rs. 1 trillion and after-tax profits of less than Rs. 5 billion. Under the revised framework, such banks may pay up to Rs. 0.75 million per director for attending a board meeting, compared to the earlier cap of Rs. 0.5 million. The changes have been introduced through amendments to the Corporate Governance Regulatory Framework. Banks typically hold four board meetings annually. The board usually comprises the chief executive officer, executive directors, nominee directors, and independent directors, who are responsible for key business decisions. Some directors also oversee board committees, including human resources and information technology. Under the framework, directors performing additional responsibilities may receive extra remuneration of up to 20 percent of their approved fees, subject to shareholder approval and proper justification in the bank’s remuneration policy. SBP has also clarified that directors’ travelling, boarding, and lodging expenses for attending board or committee meetings, as well as relevant domestic training, shall be reimbursed by the bank at actual cost. Any additional expenses will be borne by the director. Board remuneration varies across banks depending on the number of directors and fee structures. In 2024, Meezan Bank paid Rs. 65.4 million to its eight board members, United Bank Limited paid Rs. 117 million to eight directors, while Standard Chartered Bank paid Rs. 28.7 million in remuneration and allowances to its directors.