What changed
RBI issued a comprehensive master direction consolidating all previous circulars on customer service and responsible business conduct for Small Finance Banks. The direction covers 10 chapters including institutional framework, customer guidance, financial inclusion, and responsible lending. It introduces standardized formats for notices, claims, and key facts statements.
What it means for you
Small Finance Banks now have a single reference document for all customer service and conduct obligations, reducing compliance ambiguity. The direction mandates clear disclosure of Annual Percentage Rate (APR) and standardized claim forms for deposit accounts. Banks must review and update their internal policies, training, and branch procedures to meet these consolidated requirements.
What you must do
- Review the full direction and map all existing policies to the new consolidated requirements.
- Update branch notice boards and customer communication materials as per Annex I and II formats.
- Train staff on the new claim settlement procedures and standardized forms in Annex V to XII.
- Ensure loan sanction letters include APR disclosure as defined in the direction.
- Align internal audit checklists to cover all chapters of the direction.
Who it affects
Small Finance Banks, Compliance and legal teams of SFBs, Branch operations and customer service staff, Product and lending teams
When does this direction take effect?
The direction came into effect immediately upon issuance on November 28, 2025, unless a specific provision states otherwise.
Does this direction replace all previous RBI circulars on customer service for SFBs?
Yes, this is a consolidation of all previous regulatory instructions on customer service and conduct for Small Finance Banks into one master direction.
What is the definition of Annual Percentage Rate (APR) under this direction?
APR means the annual cost of credit to the borrower, including interest rate and all other charges associated with the credit facility.