Reserve Bank of India (Small Finance Banks – Governance) Amendment Directions, 2026 · RBI/2026-27/178

RBI/2026-27/178 DOR.HGG.GOV.151/29.67.001/2026-27 July 14, 2026

Reserve Bank of India (Small Finance Banks – Governance) Amendment Directions, 2026

Please refer to the Reserve Bank of India (Small Finance Banks - Governance) Directions, 2025 (hereinafter referred to as ‘Directions’).

2. In an endeavour to enable bank Boards to utilize their time effectively and to facilitate a more focused and qualitative engagement on strategy and risk governance, it has been decided to undertake a review to rationalize the extant RBI directions/circulars on the matters required to be placed before the Board. Accordingly, 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 in this regard, the Reserve Bank of India, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues the Amendment Directions hereinafter specified.

3. The Amendment Directions modify the Directions as under:

3(1) Paragraph 29 of Chapter V shall be deleted and reinserted after paragraph 20 of Chapter IV as under:

“20A. The Board shall exercise oversight on the following:

• risk management system, policy and strategy followed by the bank;
• exposures to related entities of the bank, viz. details of lending to / investment in subsidiaries, the asset classification of such lending / investment, etc.; and
• conformity with corporate governance standards viz. in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions etc.”

3(2) Paragraph 21 of Chapter IV and paragraphs 28, 30, 31, 32 and 33 of Chapter V shall be deleted.

3(3) After paragraph 33 of Chapter V, the following new paragraphs shall be inserted as under:

“33A. Notwithstanding anything contained in extant RBI circulars or directions, the requirement for matters to be placed before the Board shall be as under:

• Policies that are required to be placed before the Board for approval and those in respect of which such approval can be delegated, shall be as specified in Appendix I. Review of polices which are specified to be approved by Board may be delegated to Board Committees, with the Board approving only material amendments thereto.
• Matters, other than policies, that are required to be placed before the Board for approval/review/information, shall be as specified in Appendix II A.
• Matters, other than policies, that may be delegated at the discretion of the Board, shall be as specified in Appendix II B.

33B. In addition to above, the matters to be placed before the Board may be determined based on the following key principles:

• The Board has ultimate responsibility for the bank’s business strategy and financial soundness, key personnel decisions, internal organisation and governance structure and practices, and risk management and compliance obligations. It may, however, delegate certain matters to the Board Committees / Management Committees, along with reporting requirements as may be necessary.
• The Board shall clearly articulate the matters reserved for its approval or to be brought to its notice for information or reporting. The role and responsibilities of the Board prescribed under various statutes or regulations, shall be taken into account in determining such matters. However, the Board shall ensure that sufficient time is dedicated to strategy and risk governance.
• The Chairperson of the Board shall have the primary responsibility for setting the agenda of the meeting.
• The Board shall ensure that it receives sufficient information from the management to discharge its role effectively. It shall specify the nature, and frequency of information required from the management. The Board may seek external reports, if needed.
• The Board shall periodically review the matters to be placed before it as well as the matters delegated to the Board Committees / Management Committees. The review shall also include the timeliness of circulation of agenda items, adequacy of information captured in the agenda, time allotted for important matters, etc.”

4. These Amendment Directions shall come into force from October 01, 2026. Accordingly, the Directions / Circulars as specified in the appendices shall stand modified to the extent indicated therein with effect from October 01, 2026.

(Scenta Joy) Chief General Manager