More Stories

Informist, Tuesday, Jul. 14, 2026

--RBI issues final norms on governance of bank boards effective Oct 1 

--RBI issues amendments on matters to be placed before boards of banks 

MUMBAI – The Reserve Bank of India on Tuesday issued final governance amendment directions for commercial banks, small finance banks, payments banks and local area banks, replacing the existing prescriptive framework on matters to be placed before bank boards with a principle-based approach aimed at allowing directors to focus more on strategy and risk governance. The revised framework will come into force from Oct. 1. 

The central bank said the amendments follow stakeholder consultations on draft directions released on Apr. 8 and incorporate feedback received from banks and other stakeholders. The changes are intended to enable bank boards to "utilize their time effectively" and facilitate "a more focused and qualitative engagement on strategy and risk governance." 

Under the new framework, RBI has done away with the earlier requirement that board agendas be organised around seven broad themes, replacing it with principle-based guidance that gives boards greater flexibility to determine priorities based on their institution's specific needs. The amendment directions also remove the mandatory regulatory requirement for action-taken reports on board decisions and for placing updates on regulatory changes before the board.

RBI said boards may themselves determine the mechanisms for monitoring implementation of decisions, while compliance and secretarial functions remain responsible for apprising boards of regulatory developments. 

A key feature of the revised framework is the consolidation of all RBI-prescribed matters requiring board approval, review or information into appendices accompanying the amendment directions. These appendices classify board matters into policies requiring approval, operational matters requiring approval, review or information, and matters that may be delegated to board committees or management committees. 

The RBI said reviews of policies that require board approval may now be delegated to board committees, with boards required to approve only material amendments. During consultations, banks had sought a common regulatory definition of "material amendments", arguing that defining materiality policy-by-policy would be operationally difficult. The RBI accepted the feedback and removed the requirement for boards to define materiality.

The principles introduced under the revised framework require boards to clearly identify matters reserved for their approval, ensure sufficient time is devoted to strategy and risk governance, specify the nature and frequency of information required from management, and periodically review the effectiveness of board processes, including the quality and timeliness of agenda papers. The directions also place primary responsibility for setting board meeting agendas on the chairperson while allowing consultation with the full board.  

The RBI has simultaneously discontinued several legacy board reporting requirements from Oct. 1. These include mandatory board reviews of risk management procedures for multicity cheque issuance, review notes on export credit sanctions, implementation of rural branch instructions, ATM transaction failures and penalties, and prepaid payment instrument interoperability under digital banking policy. These requirements will cease once the amendment directions become effective. 

During consultations, the RBI also accepted suggestions to modify provisions assigning ultimate responsibility for a bank's performance to the board, requiring boards to clearly articulate matters reserved for their approval, and simplifying expectations on the information boards should receive from management.  End

Reported by Kabir Sharma

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.