The Reserve Bank of India (RBI) has lifted the ceiling on remuneration of non-executive directors in private banks to Rs 30 lakh per annum from Rs 20 lakh earlier.

In April 2021, the central bank had fixed the ceiling of remuneration at Rs 20 lakh per annum for non-executive directors.

"Considering the crucial role of non-executive directors in efficient functioning of bank boards and its various committees and in order to further enable the banks to sufficiently attract qualified competent individuals on their boards, it has been decided to revise the aforementioned ceiling to Rs 30 lakh per annum," the RBI said in a statement.

RBI further said the banks are required to have suitable criteria for granting fixed remuneration to its NEDs, with the approval of their boards before any review of the extant remuneration.

"The board of the bank may fix a lower amount within the ceiling limit of Rs 30 lakh per annum depending upon the size of the bank, experience of the non-executive director and other relevant factors," it said.

The instructions on review of fixed remuneration granted to non-executive directors would be applicable to all the private sector banks including small finance banks and payment banks as also the wholly owned subsidiaries of foreign banks.

The instructions come into force with immediate effect, the RBI said.