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

The Reserve Bank of India has issued the Reserve Bank of India (Small Finance Banks – Governance) Amendment Directions, 2026, effective from 1 October 2026, to streamline Board governance requirements and enable Boards of Small Finance Banks (SFBs) to focus more effectively on strategic oversight and risk governance. The amendments introduce Paragraph 20A, requiring the Board to oversee the bank’s risk management framework, exposures to related entities, and adherence to corporate governance standards, while deleting certain existing provisions relating to Board oversight and governance matters (Paragraph 21 of Chapter IV and Paragraphs 28, 30, 31, 32 and 33 of Chapter V). New Paragraphs 33A and 33B establish a revised framework for matters to be placed before the Board, categorising policies and other matters requiring Board approval, review, information or delegation through specified appendices, and permitting delegation of policy reviews to Board Committees subject to Board approval of material amendments. The amendments further reinforce key governance principles, including the Board’s ultimate responsibility for strategy, financial soundness, governance, risk management and compliance, the Chairperson’s responsibility for agenda setting, the Board’s authority to determine information requirements from management, and periodic reviews of Board and committee reporting arrangements to ensure effective governance and decision-making.