The State Bank of Pakistan (SBP) has approved an increase in board meeting fees for directors of commercial banks, allowing institutions to raise remuneration by up to 50 percent per meeting held under the chairmanship of the banking company. The decision has been conveyed through a circular issued by the central bank as part of amendments to the Corporate Governance Regulatory Framework, marking a notable revision in how board-level compensation is structured across the banking sector.
Under the revised limits, commercial banks with total assets exceeding Rs1 trillion or after-tax profits of at least Rs5 billion are now permitted to pay up to Rs1.2 million to a director for attending a single board meeting. Previously, the maximum allowable fee for banks in this category stood at Rs0.8 million per meeting. The increase reflects SBP’s reassessment of governance responsibilities and the expanding scope of oversight required from bank directors in a more complex financial environment.
The central bank has also adjusted remuneration ceilings for directors of smaller banks. For institutions with assets below Rs1 trillion and after-tax profits of less than Rs5 billion, the revised framework allows payment of up to Rs0.75 million per director per board meeting. This represents an increase from the earlier cap of Rs0.5 million. According to banking sector officials, the revision aims to bring greater alignment between responsibility, accountability and compensation, while maintaining prudential oversight.
These changes have been introduced through formal amendments to the Corporate Governance Regulatory Framework, which governs the composition, responsibilities and remuneration of bank boards. SBP officials indicated that the revisions were made after reviewing existing practices and benchmarking governance standards, particularly in relation to the growing regulatory, technological and risk management demands placed on bank directors.
Typically, commercial banks in Pakistan hold four board meetings annually, although additional meetings may be convened depending on operational requirements or regulatory matters. Bank boards generally include the chief executive officer, executive directors, nominee directors and independent directors. Collectively, they are responsible for approving strategy, overseeing risk management, ensuring regulatory compliance and safeguarding the interests of depositors and shareholders.
In addition to core board duties, several directors also serve on specialised committees, such as audit, human resources, risk management and information technology committees. These committees play a critical role in strengthening internal controls, overseeing digital transformation initiatives and ensuring compliance with evolving regulatory expectations. Recognising these additional responsibilities, the SBP framework allows directors performing extra roles to receive supplementary remuneration.
Under the updated rules, directors entrusted with additional responsibilities may be paid extra remuneration of up to 20 percent of their approved meeting fees. However, such payments are subject to shareholder approval and must be supported by clear justification within the bank’s remuneration policy. The central bank has emphasised that transparency and proper disclosure remain essential to prevent misuse of revised compensation limits.
The SBP has also clarified policies regarding expense reimbursement for directors. According to the circular, banks are required to reimburse directors for travelling, boarding and lodging expenses incurred while attending board or committee meetings, as well as relevant domestic training programmes, strictly on an actual cost basis. Any expenses beyond these approved categories will have to be borne by the directors themselves, reinforcing cost discipline and accountability.
Board remuneration levels vary significantly across the banking sector, depending on factors such as the number of directors, meeting frequency and individual fee structures. Public disclosures show that in 2024, Meezan Bank paid a total of Rs65.4 million in remuneration to its eight board members. United Bank Limited paid Rs117 million to eight directors during the same period, while Standard Chartered Bank Pakistan reported Rs28.7 million in remuneration and allowances paid to its directors.
Banking analysts note that while the revised limits increase costs for banks, they may also help attract and retain experienced professionals at the board level, particularly as regulatory expectations and oversight responsibilities continue to expand. At the same time, the emphasis on shareholder approval and policy-based justification is expected to act as a safeguard against excessive payouts.
The SBP’s move underscores its broader focus on strengthening corporate governance within the banking system, ensuring that remuneration structures support effective oversight while remaining aligned with financial performance and regulatory discipline.
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