Reserve Bank of India amends small finance bank governance rules to streamline Board matters and permit wider delegation from October 1, 2026

The Reserve Bank of India has issued amendments to its 2025 governance directions for small finance banks to rationalize which matters must go to the Board and to give Boards more time for strategy and risk governance. The changes replace parts of the existing framework with a principle-based structure that distinguishes between policies that need Board approval, non-policy matters that must be placed before the Board, and matters that may be delegated to Board Committees or Management Committees. Under the revised framework, the Board must exercise oversight over the bank’s risk management system, policy and strategy, exposures to related entities including lending to and investment in subsidiaries and the asset classification of those exposures, and compliance with corporate governance standards such as committee composition, roles, meeting frequency and review coverage. Policies requiring Board approval, and those whose approval can be delegated, are set out in Appendix I. Other matters requiring Board approval, review or information are set out in Appendix II A, while delegable non-policy matters are listed in Appendix II B. Review of policies that require Board approval may be delegated to Board Committees, with the Board approving only material amendments. The amendments also require the Board to define reserved matters, specify the nature and frequency of management information, and periodically review both delegated matters and the quality and timeliness of agenda materials. The amendments take effect on October 1, 2026. From that date, the directions and circulars identified in the appendices will stand modified to the extent specified there.