Banks should recognize fair value of share-linked incentives to CEOs/ WTDs as expense in their books of accounts: RBI
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- Last Updated on 1 September, 2021
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CIRCULAR NO. DOR.GOV.REC.44/29.67.001/2021-22, dated 30.08.2021
The Reserve Bank of India (RBI) had issued guidelines on the compensation of whole-time directors, chief executive officers, material risk-takers, and control function staff, and it has now been discovered that banks do not record the grant of share-linked compensation as an expense in their books of account. As a result, it has been clarified that the fair value determined in this manner shall be recognized as an expense commencing with the accounting period for which approval has been obtained.
In addition, Banks should ensure compliance with the above instructions for all share-linked instruments granted after the accounting period ending March 31, 2021.
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