Reserve Bank of India (Non-Banking Financial Companies – Governance) Directions, 2025

RBI/DOR/2025-26/344 DOR.GOV.REC.No.263/18-10-013/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Non-Banking Financial Companies - Governance) Directions (Updated as on June 24, 2026)

Table of Contents

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

Chapter II – Board approved policy and review

Chapter III - Directions applicable to all NBFCs A. Experience of the Board B. Risk Management Committee C. Change in Directors and / or Management

Chapter IV – Directions applicable to NBFCs-Middle Layer (NBFCs-ML) and Upper Layer (NBFCs-UL) A. Constitution of Board and Appointment of Directors B. Reviews C. Committees of the Board D. Appointment of Chief Risk Officer E. Appointment of Chief Compliance Officer F. Key Managerial Personnel G. Independent Director H. Compensation of KMP and Senior Management I. Miscellaneous Instructions J. Internal Guidelines on Corporate Governance

Chapter V – Directions applicable to NBFCs-Upper Layer (NBFCs-UL)

Chapter VI – Repeal and other provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations

Annex I Annex II Annex III

In exercise of the powers conferred by Sections 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934, Sections 29A, 30A, 31 and 32 of National Housing Bank Act, 1987, Sections 3 (read with section 31A) and 6 of Factoring Regulation Act, 2011, 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 (Non-Banking Financial Companies - Governance) Directions, 2025.

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

B. Applicability

3. These Directions shall be applicable to the following Non-Banking Financial Companies (hereinafter collectively referred to as 'NBFCs' and individually as an 'NBFC'), subject to Layer-wise applicability specified in sub-paragraph (1) below:

(1) NBFCs classified under the Base Layer (NBFCs-BL) shall comply with the provisions of Chapter III, those under the Middle Layer (NBFCs-ML) shall comply with Chapters II, III and IV, while those under the Upper Layer (NBFCs-UL) shall be governed by the provisions of Chapters II, III, IV, and V, unless stated otherwise.

Provided that,

the provisions pertaining to 'Compensation of KMP and Senior Management' as set out in paragraphs 29 to 37 of these Directions shall not apply to Government owned NBFCs.

(2) The provisions of Paragraph 7 to 43 herein shall apply to the following, subject to Layer-wise applicability as mentioned in sub-paragraph (1) above:

(i) NBFC-ICC registered with the RBI under the provisions of the RBI Act, 1934; (ii) NBFC-Factor registered with the RBI under the provisions of the Factoring Regulation Act, 2011; (iii) NBFC-MFI registered with the RBI under the provisions of the RBI Act, 1934; (iv) NBFC-IFC registered with the RBI under the provisions of the RBI Act, 1934; (v) IDF-NBFC registered with the RBI under the provisions of the RBI Act, 1934; (vi) HFC registered with the RBI under the provisions of the NHB Act, 1987.

(3) The provisions of Paragraphs 7 to 15, 18 to 39, and 41 to 43 shall apply to a CIC registered with the RBI under the provisions of the RBI Act, 1934;

(4) The provisions of Paragraphs 7(2), 7(3), 8, 9, 16 to 18, 25 to 39, and 41 to 43 shall apply to an MGC registered with the RBI under the scheme of Registration of Mortgage Guarantee Companies, subject to Layer-wise applicability as mentioned in sub-paragraph (1) above;

(5) The provisions of Paragraph 7 to 9, 12 to 18, and 25 to 40 shall apply to an SPD registered with the RBI as an NBFC under the provisions of the RBI Act, 1934;

(6) The provisions of Paragraphs 8, 10 to 13, 17(1) and 18 shall apply to an NBFC-AA registered with the RBI under the provisions of the RBI Act, 1934;

Note: The above-mentioned Paragraphs 12, 13, 17(1) and 18 shall be applicable to an NBFC-AA, despite their categorization as NBFCs-BL under the SBR Framework.

(7) The provisions of Paragraphs 8 to 13 shall apply to an NBFC-P2P registered with the RBI under the provisions of the RBI Act, 1934.

Note: The above- mentioned paragraphs 12 and 13 shall be applicable to an NBFC-P2P, despite their categorization as NBFCs-BL under the SBR Framework.

4. These Directions are not applicable to an NOFHC registered with the RBI as an NBFC under the provisions of the RBI Act, 1934.

Note: The applicability under these Directions is in line with the regulatory structure for NBFCs as set out in Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.

C. Definitions

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

(1) '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.

(2) 'Company' means a company registered under Section 3 of the Companies Act, 1956 or the corresponding provision under the Companies Act, 2013.

(3) 'Director' means a director appointed on the Board of an NBFC.

(4) 'Independent Director' shall be as defined in Section 149(6) of the Companies Act, 2013.

(5) 'Key Managerial Personnel' shall have the meaning assigned to it under clause 51 of Section 2 of the Companies Act, 2013.

(6) 'Malus' means an arrangement that permits an NBFC 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.

(7) 'Relative' shall have the meaning assigned to it under clause 77 of Section 2 of the Companies Act, 2013.

(8) 'Retention period' means the period after the vesting of instruments which have been awarded as variable pay during which they cannot be sold or accessed.

(9) 'Senior Management' shall have the meaning as assigned to it in 'Explanation' to Section 178 of the Companies Act, 2013.

(10) 'Substantial interest' shall mean holding of a beneficial interest by an individual or his spouse or minor child, whether singly or taken together in the shares of a company, the amount paid up on which exceeds ten per cent of the paid-up capital of the company; or the capital subscribed by all the partners of a partnership firm.

6. 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 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 Board approved policy and review

7. An NBFC falling under the Middle Layer or Upper Layer shall have Board approved policies in place for the following:

(1) a policy for ascertaining the 'fit and proper' status of the directors at the time of appointment, and on a continuing basis, as detailed in paragraph 12 of these Directions;

(2) a policy laying down the role and responsibilities of the Chief Compliance Officer (CCO) with the objective of promoting a good compliance culture in the organization, as specified in paragraph 25(2) of these Directions;