Will the RBI guidelines on bank staff compensation lead to spur in FRM demand?

In Jan-2012, the RBI(India's banking regulator) announced the Indian version of the Financial Stability Board(FSB) guidelines of 2009, which set principles for banking compensation that aims to align risk with return, ensure independent director oversight etc. The principles can be read here(http://rbi.org.in/scripts/NotificationUser.aspx?Id=6938&Mode=0) and are effective from the Mar12 fiscal onwards.

While the principles come as no surprise for risk taking staff(clawback/deferral etc), what is interesting is the recomendation for higher base pay for control function staff, as can be read below.

2.2 Guideline 4: For risk control and compliance staff

2.2.1 Members of staff engaged in financial and risk control should be compensated in a manner that is independent of the business areas they oversee and commensurate with their key role in the bank. Effective independence and appropriate authority of such staff are necessary to preserve the integrity of financial and risk management’s influence on incentive compensation. Back office and risk control employees play a key role in ensuring the integrity of risk measures. If their own compensation is importantly affected by short-term measures, their independence will be compromised. If their compensation is too low, the quality of such employees may be insufficient to their tasks and their authority may be undermined. The mix of fixed and variable compensation for control function personnel should be weighted in favour of fixed compensation.

2.2.2 Subject to the above, in devising compensation structure, banks may adopt principles similar to principles enunciated for WTD/CEO, as appropriate.

The above principles would imply a high base pay, skewed towards fixed amount. The last time the compensation of employees was delinked from their business unit performance(as happened for equity research analysts whose bonus was delinked from investment banking revenues), that did not reduce the pay much as banks still set bonus in a black box type approach, which DOES consider investment banking revenues as well. But because RBI has plugged the loophole of high bonuses in its guidelines, it should ensure a good fixed pay. 

Qualifications like FRM are not as popular(yet) as CFA in India, because the risk function is still not as respected/well paid. But with such remuneration norms coming in place with the elevation of the rusk function, this should change. One of the reasons Goldman Sachs has been relatively unscarred by any crisis, is the competence and organizational profile of its famed control function. The sooner other banks realize this, the better it is for the industry and for risk management professionals.