Reserve Bank of India (Regional Rural Banks – Governance) Directions, 2025
RBI master-direction RBI/DOR/2025-26/249 · 28 Nov 2025
Summary
Check the official recordWhat changed
The Reserve Bank of India issues governance directions for Regional Rural Banks to improve board oversight and operational transparency. These directions define the roles of directors, establish board meeting procedures, and mandate the formation of an Audit Committee and a Risk Management Committee. Regional Rural Banks must ensure directors follow specific conduct standards, including regular meeting attendance and conflict of interest disclosures. The Audit Committee oversees financial reporting, internal controls, and audit compliance. The Risk Management Committee develops integrated risk strategies. These directions replace previous governance instructions for Regional Rural Banks. Regional Rural Banks must implement these requirements immediately to ensure compliance with statutory obligations under the Banking Regulation Act, 1949, and the Regional Rural Banks Act, 1976.
What you must do
- Directors must attend board meetings regularly and disclose interests in proposals.
- RRBs must establish an independent Audit Committee of the Board.
Document text
RBI/DOR/2025-26/249 DOR.GOV.REC.No.168/29.67.001/2025-26 November 28, 2025
Reserve Bank of India (Regional Rural Banks - Governance) Directions
Table of Contents
- Chapter I - Preliminary
- A. Short title and commencement
- B. Applicability
- C. Definitions
- Chapter II - Role of Nominee Directors and Non-Official Directors
- Chapter III – Board Meeting Procedures
- Chapter IV – Committees of the Board
- A. Audit Committee of the Board
- B. Risk Management Committee
- Chapter VI – Repeal and other provisions
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, 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
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These Directions shall be called the Reserve Bank of India (Regional Rural Banks - Governance) Directions, 2025.
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These Directions shall come into force with immediate effect.
B. Applicability
- These Directions shall be applicable to Regional Rural Banks (hereinafter collectively referred to as ‘RRBs’ and individually as an ‘RRB’) as defined under Clause (ja) of Section 5 of the Banking Regulation Act, 1949, to the extent they are not inconsistent with the statutory provisions or instructions issued thereunder.
C. Definitions
- In these directions, unless the context states otherwise, the terms herein shall bear the meanings assigned to them below:
(1) ‘Chairman’, in relation to an RRB, means the individual appointed or re-appointed under sub-section (1) of section 11 of The Regional Rural Banks Act, 1976, as the Chairman of that bank.
(2) ‘Commercial Banks’ means Public Sector Banks, Private Sector Banks, Regional Rural Banks and Foreign Banks.
(3) ‘Director’, in relation to an RRB, means a member of the Board of that RRB.
(4) ‘Sponsor Bank’ means the bank defined under Clause (g) of Section 2 of the Regional Rural Banks Act, 1976.
- 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, the Regional Rural Banks Act, 1976, 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 Role of Nominee Directors and Non-Official Directors
- The directors on the Board of an RRB shall ensure adherence to the following illustrative, but not exhaustive, list of DO'S and DONT'S:
(1) DO'S: A board member shall
(i) attend Board meetings regularly and effectively; Explanation: Under Section 13(1)(b) of the RRBs Act 1976, the seat of a nominee director who remains absent without leave of the Board for more than 3 consecutive meetings shall become vacant.
(ii) study the Board papers, follow up and seek the assistance of the Chairman for eliciting any information;
(iii) ask the Chairman to furnish the board papers and follow up reports on a definite time schedule;
(iv) be involved in the follow up of the matter of formulation of general policy and ensure performance;
(v) be familiar with the objectives of the bank and policies laid down by GoI and RBI, and give constructive ideas for better management;
(vi) work as a team member without any prejudice;
(vii) try to give as much of their wisdom, guidance and knowledge as possible;
(viii) analyse the trends of economy and assist in discharge of the responsibility; and
(ix) disclose their interest whenever any advance for any proposal in which they are directly or indirectly interested,
(2) DONT'S: A board member shall not
(i) participate in meetings in which any advance for any proposal in which they are directly or indirectly interested is discussed;
(ii) send any instructions to any individual officer or give direction to individual officer in any matter. This may be routed through the Chairman of the RRB;
(iii) involve in any administrative matters;
(iv) interfere in the day to day functioning of the bank;
(v) insist on getting facilities from an individual branch manager;
(vi) involve in the day to day business of management's functions;
(vii) reveal any information of the bank to anyone; and
(viii) encourage an individual officer from approaching them in any matter.
Chapter-III Board Meeting Procedures
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The quorum of a Board meeting shall be in accordance with the rule 8 of meetings of Board Rules notified by Government from time to time, with the modification that if there is no quorum in the adjourned meeting of the Board, the Chairman of RRB should give fresh notice for a fresh meeting.
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While outsiders including officials of the Sponsor Bank who are not Directors are not allowed to attend meeting of the Board of an RRB to observe secrecy relating to the affairs of the RRB’s constituents, a senior official of the RRB may attend the Board meeting to provide secretarial assistance to the Chairman. They, however, cannot participate in the deliberations or discussions of the Board Meetings.
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A model agenda for meetings of the Board of an RRB is given below:
| Sr. No. | Agenda Item | Nature of items (Statutory/ Non-statutory) |
|---|---|---|
| 1) | Minutes and Action Taken Report | |
| i. | Confirmation of the minutes of the previous Board meeting | |
| ii. | Actions taken on the decisions taken during the previous Board meetings | |
| 2) | Policies & Review of policies | Statutory |
| i. | New policy for approval and existing policies for renewal | |
| ii. | Important circulars issued by RBI/ NABARD/ Government/ Sponsor Bank for adoption in toto or with suitable modifications as per the needs of the bank | |
| iii. | Review of important/ key policies/ Matrix of policies | |
| iv. | "RRBs in Focus" — Monitorable Action Plan | |
| 3) | Review of financial performance of; | |
| i. | Review of status of Share capital, Reserve & Surplus | |
| ii. | Deposits — Status of deposits, Special campaign for improving CASA deposits, status of insurance under DICGC, interest rate under various deposits | |
| iii. | Borrowings — Status of borrowings, Security given/lien created for borrowings, default in repayment, if any | |
| iv. | Other Liabilities — Review of reconciliation of Sundry Creditors/lnter-branch Adjustment A/c especially with Iong pending dues, provision made | |
| v. | Review of status of Provisions for tax, depreciation, other liabilities | |
| vi. | Review of status of contingent liabilities viz. issue of bank guarantee/ letter of credit, amount transferred to DEAF, etc. | |
| vii. | Cash & bank balances — Review of cash-in-hand limits, physical verification of cash, insurance, cash shortages counterfeit notes, cash counting machines | |
| viii. | Loans & Advances — Review of various types of loans — KCC, Agri term loan, MSME, SHG/ JLG, jewel loans, housing, retail, etc. - Review of big borrowers, Top 20/ 50 loan accounts — Review of high yielding advances sanctioned by the bank - Adherence to exposure norms prescribed by RBI/ NABARD - Enrolment as Member Lending Institution of different Credit Guarantee Funds under CGTMSE/ NCGTC — Status of membership of Credit Information Companies | |
| ix. | Investments — Assessment of investible surplus, avenues for investment, delegation of powers, procedures, empanelment of brokers, if any — SLR & Non-SLR investment, stop loss limit, exposure norms, status of Non-Performing Investments & provisions there against, disclosures, reporting | |
| x. | Fixed Assets (FA) — Review of FA including book value, depreciation, purchase/disposal of movable/ immovable assets, etc. | |
| xi. | Other Assets — Status of interest receivable, Review of Sundry Debtors/ Suspense Account and provision made against loss | |
| 4) | Financial statements | |
| Annual Financial statements with Auditor's Report Review | ||
| 5) | Profit & Loss Position | |
| i. | Income & Expenditure (with a view of maximising operating profit, net profit, reduction of expenditure) | |
| ii. | Key financial ratios | |
| iii. | Transfer Price mechanism and Branch profitability | |
| iv. | Non-fund business activities — Undertaking of cross selling insurance business as an agent | |
| v. | PSLC traded by bank | |
| vi. | Review of branches/ loss making branches — Review of discussions held during Branch Manager's review meetings | |
| vii. | Status of market share of the bank's business - Review | |
| 6) | Review of performance of NPAs and Standard Assets | Statutory |
| i. | Review of top 50 Standard Borrower Accounts | |
| ii. | Review of top 50 NPA Accounts | |
| iii. | Status of Gross NPAs | |
| iv. | Position of SMAs | |
| v. | Movement of NPAs | |
| vi. | Provisions for standard assets and NPAs | |
| vii. | Provision Coverage Ratio | |
| viii. | Status of time-barred loans/ documents | |
| ix. | Legal action cases — suit filed/ arbitration cases, OTS, Write-off, Restructuring of loans, SARFAESI Act, etc. | |
| 7) | Performance Review of developmental areas | |
| i. | Annual Credit Plan — Region-wise review | |
| ii. | Priority Sector lending — Target & Achievement under various categories | |
| iii. | Sustainable Viability Plan — Target vis-a-vis achievement | |
| iv. | Credit to Deposit Ratio | |
| v. | Govt sponsored scheme – Review | |
| (a) | KCC coverage and initiatives — Interest Subvention/ Subsidy scheme | |
| (b) | Crop Insurance scheme – coverage | |
| (c) | Agriculture term loan and initiatives | |
| (d) | MSME loan and initiatives | |
| (e) | SHG/ JLG schemes – initiatives | |
| (f) | FPO scheme – initiatives | |
| (g) | Social Security Schemes (PMJDY, PMSBY, APY etc.) | |
| (h) | Agriculture Infrastructure Fund (AIF) | |
| (i) | PM Surya Ghar Muft Bijli Yojana | |
| (j) | Udyami Mitra | |
| (k) | Stand up India | |
| (l) | Status of finance to different social categories of borrowers | |
| (m) | Pradhan Mantri MUDRA Yojana | |
| (n) | Other Flagship programmes of Gol - Pradhan Mantri Awas Yojana, National Livelihood Mission-Ajeevika, Production Linked Incentive Scheme for Food Processing Industry, Pradhan Mantri Kisan Sampada Yojana, PM Vishwakarma Scheme, Prime Minister Formalisation of Micro Food Processing Enterprise | |
| (o) | Any other scheme | |
| 8) | Financial inclusion initiatives | |
| i. | Status of banking outlets opened including new licenses, since previous meeting | |
| ii. | Status of Branch expansion | |
| iii. | Performance review of Business Correspondents/ Corporate BC | |
| iv. | Status of Financial Literacy - Conduct of programmes/ campaigns | |
| 9) | Technology Initiatives | |
| i. | Budget for CBS/CBS plus initiatives and utilization | |
| ii. | Review of onboarding of 33 CBS plus services and usage by customers (as stipulated by DFS, Gol) | |
| iii. | Functioning of ATMs and mobile/ internet banking | |
| iv. | Association of Fin-techs/ Agri-techs in promotion of technology, if any | |
| 10) | Status of compliance to important provisions of BR Act 1949/RBI Act 1934/RRB Act 1976/Other Acts/Rules applicable to RRBs | Statutory |
| i. | Compliance to provisions of Section 19, 20, 21, 23, 24, 26, 26A(DEAF), 27, 29, 31 & 35A of B. R. Act, 1949 Compliance to provisions of Section 42(1), 42(6)(a)(i) and 42(6)(a)(ii) of RBI Act, 1934 | |
| ii. | Submission of statutory returns (like CTR, STR, CCR, cyber security related VICS, Matrix of Policies, KYC/AML/CFT, fraud related VINFRA, etc.) to RBI/ FIU-INDIA (Gol)/ NABARD | |
| iii. | KYC/ AML/ CFT guidelines | |
| iv. | NABARD Inspection — Observations and compliance | |
| v. | Penalties levied on the bank by RBI, if any | |
| vi. | Status of complaints/ Grievance Redressal Mechanism | |
| vii. | Compliance in respect of outstanding observations of the Board | |
| 11) | Governance System | Statutory |
| i. | Calendar of Board meeting & Agenda items to be placed in the meeting | |
| ii. | Appointment/ Change/ Leave /Absence of Directors | |
| iii. | Details of absence of Chairman from HQ | |
| iv. | Constitution and Performance of various board level committee and other important committee like Audit Committee, Risk Management Committee, Asset Liability Management Committee, Investment Committee, Committee for monitoring of frauds, IT related Committees, Business Advisory Committee in RRBs in Focus, Customer Services Committee | |
| v. | Chairman General Manager's branch visits | |
| vi. | Payment of Sitting fee to Directors and payment of TA, etc. to Chairman | |
| vii. | Appeals of the staff against punishment order passed by the Chairman and Disciplinary authority | |
| viii. | Details of special rates approved by Chairman/ Bank for special/ bulk deposits, if any | |
| ix. | Tie-up arrangements of bank with different companies/ agencies/ vendors | |
| x. | Delegation of discretionary power for Capital and Revenue expenditure by sanctioning authority | |
| xi. | Credit facilities sanctioned under the powers of Chairman/ Head Office Level Credit Committee | |
| xii. | Prudential write-off approved by Chairman/ Committee | |
| 12) | Internal Checks & Control System | Statutory |
| i. | Observations of Audit Committee and compliance | |
| ii. | Observations of IS Audit and compliance | |
| iii. | Observations of Management Audit and compliance | |
| iv. | Review of frauds/ embezzlements/ thefts/ burglaries/ robberies | |
| v. | Areas of income leakage and remedial measures | |
| vi. | Complaints received under Ombudsman Scheme | |
| vii. | Review of customers' meetings | |
| viii. | Review of Grievance Redressal mechanism | |
| 13) | Risk Management System | Statutory |
| i. | Review of Risk Management Systems - Strengthening of Risk Management Structure, Conduct of Risk Management meeting, Internal Capital Adequacy Assessment Process (ICAAP) document, Stress testing, Business Continuity Plan, Disaster Recovery Management | |
| ii. | Review of liquidity position | |
| iii. | Adoption of Vulnerability Index for Cyber Security framework (VICS) for establishing Cyber Security Controls and Fraud Vulnerability Index (VINFRA) | |
| iv. | Instances of cyber-attacks including attempts at intrusion in Information Systems | |
| v. | Major disruptions in extension of banking services to customers including staff agitation and rectification thereof | |
| 14) | Human Resource Management & Capacity building | |
| i. | Manpower planning | |
| ii. | Recruitment | |
| iii. | Promotion | |
| iv. | Outsourcing of services — Formulation and review | |
| v. | Review of disciplinary, vigilance and non-vigilance cases against staff/ officers | |
| vi. | Review of legal cases relating to staff and other matters | |
| vi. | Review of staff rotation/ transfer policy | |
| viii. | Appreciation/ Awards, if any | |
| ix. | Training Need Assessment (TNA) of staff | |
| x. | Status report on training, training establishment, quality of faculty members, infrastructure of training establishment | |
| 15) | Inspection & Audit | Statutory |
| i. | Status of Branch inspection | |
| ii. | Progress of Risk Based Internal Audit | |
| iii. | Branch rating | |
| iv. | Appointment of Statutory Auditors, Concurrent Auditors, Internal Auditors, and review thereof | |
| v. | Observations of Statutory Auditors (LFAR), Concurrent Auditors, Internal Auditors, and compliance thereto | |
Source details
- Source
- Reserve Bank of India
- Type
- master-direction
- Published by source
- 28 Nov 2025
- Document number
- RBI/DOR/2025-26/249
- Issuing division
- Department of Regulation
- Coverage area
- banking