KATHMANDU: Nepal Rastra Bank (NRB) has issued a new directive capping the salaries, allowances and perks of bank Chief Executive Officers (CEOs) to boost transparency and corporate governance.

Under the new rules, banks must form an independent committee to set executive pay, which will now be strictly limited based on a percentage of either institutional assets or total employee expenses—whichever is lower.

Additionally, up to 20% of a CEO’s compensation can now be tied directly to performance metrics like net profit, return on assets and management of non-performing loans.

The directive also slashes executive perks, restricting CEOs to just one vehicle, one phone, and one laptop, while capping allowance expenses at 0.50% of their salary.

The rules apply to all new executive contracts, excluding state-owned banks, foreign bank branches, and institutions with over 20% foreign investment.