RBI Update -Reserve Bank of India (Local Area Banks – Governance) Amendment Directions, 2026

The Reserve Bank of India has issued the Reserve Bank of India (Local Area Banks – Governance) Amendment Directions, 2026, effective from 1 October 2026, to streamline governance requirements and enable the Boards of Local Area Banks to focus more effectively on strategic oversight and risk governance. The amendments delete Paragraph 15 of Chapter IV and Paragraphs 20 and 21 of Chapter V, and rename Chapter V from “Calendar of Reviews and Board Meeting Procedures” to “Matters to be placed before the Board.” New Paragraphs 21A and 21B introduce a revised framework prescribing the policies and other matters that must be placed before the Board for approval, review or information, as well as matters that may be delegated to Board or Management Committees, as specified in the relevant appendices. The amendments further establish key governance principles, reaffirming the Board’s ultimate responsibility for the bank’s strategy, financial soundness, governance, risk management and compliance, while permitting appropriate delegation subject to reporting requirements. They also emphasise the Chairperson’s role in agenda setting, the Board’s responsibility to define management information requirements, and the need for periodic review of Board and committee matters to ensure effective governance, timely information flow and informed decision-making.