Mumbai, Nov. 8 -- The Reserve Bank of India on Monday, 4 November, said chief executives of banks should have at least half of their pay based on performance, as the regulator tries to tweak incentives to prevent the reckless risk-taking that has burdened India's lenders with record bad loans.
Employees, RBI said, were often rewarded for increasing short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organizations. Misaligned compensation practices, especially of large financial institutions, were among the important factors that contributed to the global financial crisis in 2008, the regulator said.
"These perverse incentives amplified excessive risk taking that severel...