Reserve Bank of India (Commercial Banks - Governance) Directions, 2025

RBI/DOR/2025-26/149 DOR.HGG.GOV. No.68/29.67.001/2025-26 November 28, 2025

Reserve Bank of India (Commercial Banks - Governance) Directions, 2025

Table of Contents

Chapter-I Preliminary A. Short title and commencement B. Applicability C. Definitions

Chapter-II Public Sector Banks A. Role of the Board B. Board Structure and Practices C. Committees of the Board D. Fit and Proper’ Criteria for Elected Directors E. Appointment of Chief Risk Officer F. Appointment of Chief Vigilance Officer G. Appointment of Chief Financial Officer and Chief Technical Officer H. Appointment of Company Secretary I. Appointment of Nominee Directors on assisted companies

Chapter-III Private Sector Banks A. Constitution of Board and Appointment of Directors B. MD&CEO / CEO, Part-time Chairman and Whole-time Directors C. Role of the Board and Individual Directors D. Board Structure and Practices E. Committees of the Board F. Appointment of Chief Risk Officer G. Appointment of Chief Financial Officer and Chief Technical Officer H. Remuneration of NEDs, WTDs, MD&CEO / CEO, Material Risk Takers, and Control Function staff I. Regulatory approvals and Reporting

Chapter-IV Foreign Banks

Chapter-V Repeal and other provisions

Annex I Annex II Annex III Annex IV Annex V Annex VI

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, sub-section (2) of Section 19A of the State Bank of India Act, 1955 [hereinafter referred to as SBI Act]; and sub-sections (3AA) & (3AB) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980 and all other provisions / laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.

Chapter-I Preliminary

A. Short title and commencement

1. These Directions shall be called the Reserve Bank of India (Commercial Banks: Governance) Directions, 2025.

2. These Directions shall come into force with immediate effect.

B. Applicability

3. These Directions shall be applicable to Commercial Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank'). For the purpose of these Directions, ‘Commercial Banks’ mean banking companies (other than Small Finance Banks, Payment Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949.

4. In this regard:

• (i) Public Sector Banks (hereinafter collectively referred to as ‘PSBs’ and individually as a ‘PSB’) shall be governed by provisions specified in Chapter II to the extent they are not inconsistent with their statutory provisions or instructions issued thereunder.
• (ii) Private Sector Banks (hereinafter collectively referred to as ‘PVBs’ and individually as a ‘PVB’) shall be governed by provisions specified in Chapter III.
• (iii) Foreign Banks (hereinafter collectively referred to as ‘FBs’ and individually as a ‘FB’) shall be governed by provisions specified in Chapter IV.

Provided that non-scheduled commercial banks shall be exempt from provisions contained in:

• paragraph 29 to paragraph 33 and paragraph 59 relating to ‘Appointment of Chief Risk Officer’; and
• paragraph 36 and paragraph 60 pertaining to ‘Appointment of Chief Financial Officer and Chief Technical Officer’.

5. The contents of this Master Direction shall be read along with other relevant governing statutes and shall be applicable notwithstanding anything to the contrary contained in the licensing conditions, notifications, directions, regulations, guidelines, instructions, etc., issued by RBI before the issue of these Directions.

C. Definitions

6. In these Directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below:

• (1) ‘Chairperson’ means the Chairman / Part-time Chairman of the Board of Directors of a bank.
• (2) ‘Clawback’ means a contractual agreement between the employee and the regulated entity in which the employee agrees to return previously paid or vested remuneration to the entity under certain circumstances.
• (3) ‘Director’ means a director appointed to the Board of a bank.
• (4) ‘Elected Director’ or ‘Shareholder Director’ means a director referred to in Section 19(c) of the SBI Act, and clause (i) of sub-section (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980.
• (5) ‘Government of India Nominee Director’ means a director referred to in Section 19(e) of the SBI Act and Section 9(3)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980.
• (6) ‘Independent Director’ shall be as defined in Section 149(6) of the Companies Act, 2013. In case of PSBs, Non-Official Directors as clarified by GoI from time to time, shall be deemed as Independent Directors.
• (7) ‘Major shareholder’ shall have the same meaning as under the Reserve Bank of India (Commercial Banks – Acquisition and Holding of Shares or Voting Rights) Directions, 2025
• (8) ‘Malus’ means an arrangement that permits a bank to prevent vesting of all or part of the amount of a deferred remuneration. Malus arrangement does not reverse vesting after it has already occurred.
• (9) ‘Nationalised bank’ means a corresponding new bank constituted under sub-section (1) of Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 / 1980.
• (10) ‘Non-official director’ means director referred to in Section 9(3)(g), (h) & (i) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980, and Section 19(c) & (d) of SBI Act.
• (11) ‘Non-Operative Financial Holding Company’ (NOFHC) means a non-deposit taking NBFC which holds the shares of a banking company and the shares of all other financial services companies in its group, whether regulated by RBI or by any other financial regulator, to the extent permissible under the applicable regulatory prescriptions.
• (12) ‘Relative’ shall have the meaning assigned to it under clause 77 of Section 2 of the Companies Act, 2013.
• (13) ‘Retention period’ means the period of time after the vesting of instruments which have been awarded as variable pay during which they cannot be sold or accessed.
• (14) ‘Scheduled bank’ shall mean a bank included in the Second Schedule to the Reserve Bank of India Act, 1934.
• (15) ‘State Bank of India’ means the State Bank of India constituted under Section 3 of the SBI Act, 1955.
• (16) ‘Substantial interest’ shall have the same meaning as assigned to it in Section 5(ne) of the Banking Regulation Act, 1949

7. All other expressions, unless defined herein, shall have the same meaning as have been assigned to them under the Reserve Bank of India Act, 1934 or the Banking Regulation Act, 1949 or the State Bank of India Act, 1955 or the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 / 1980 or the Companies Act, 2013 and Rules made thereunder, or any statutory modification or re-enactment thereto, or Glossary of Terms published by RBI or as used in common or commercial parlance, as the case may be

Chapter-II Public Sector Banks

A. Role of the Board

8. A PSB’s Board shall fulfil four major roles viz. overseeing the risk profile of the PSB, monitoring the integrity of its business and control mechanisms, ensuring the expert management, and maximising the interests of its stakeholders.

9. The Board of a PSB shall ensure that responsibilities of its directors are well-defined, and every director is familiarised with the functioning of the PSB before their induction, covering the following essential areas:

• (i) delegation of powers to various authorities by the Board,
• (ii) strategic plan of the institution
• (iii) organizational structure
• (iv) financial and other controls and systems
• (v) economic features of the market and competitive environment.

10. The Board of a PSB needs to set and enforce clear lines of responsibility and accountability for itself as well as the senior management and throughout the organization.

11. A PSB shall institutionalise discussions between its management and the Board on quality of internal control systems. The Board shall specifically pay attention to creating and sustaining a culture of control.