Reserve Bank of India (Small Finance Banks - Compliance Function) Directions, 2026.

The Reserve Bank of India (Small Finance Banks – Compliance Function) Directions, 2026 establish a comprehensive framework for strengthening the compliance function in Small Finance Banks. The Directions require banks to maintain an independent Compliance Department headed by a Chief Compliance Officer (CCO), with clear oversight by the Board and senior management. The framework emphasizes a strong compliance culture through Board-approved compliance policies, risk-based compliance programmes, regular compliance monitoring, testing, reporting, and annual compliance risk assessments. It also prescribes the structure, staffing, authority, independence, appointment, tenure, and responsibilities of the CCO, ensuring that the compliance function remains independent of business operations and internal audit. Further, the Directions require banks to adopt technology-driven compliance monitoring systems, strengthen governance through periodic reviews and reporting, and ensure timely compliance with RBI supervisory observations. Overall, the Directions aim to enhance regulatory compliance, improve governance standards, reduce compliance risks, and promote accountability and transparency across Small Finance Banks.