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RBI Issues New Governance Directions for Payments Banks

Current · Source: Reserve Bank of India · RBI/DOR/2025-26/209 · issued 28 Nov 2025 · ~2 min read
Quick answerRBI has issued the Payments Banks Governance Directions 2025, effective immediately, covering board constitution, director appointments, risk management roles, and remuneration norms. Non-scheduled payments banks get partial exemptions on CRO, CFO, and CTO appointments.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore is reviewing her bank's new board appointment process. She sees that before hiring a new director, the bank must now collect a detailed form (Annex I) to prove the person is 'fit and proper'—meaning they have no criminal record and have the right experience. She updates her checklist to include this step, ensuring her bank follows the RBI's 2025 rules.

What changed

RBI issued a comprehensive governance framework specifically for payments banks under Section 35A of the Banking Regulation Act, 1949. The directions cover board composition, director fit-and-proper criteria, appointment of MD&CEO, part-time chairman, whole-time directors, and key roles like CRO, CFO, and CTO. It also introduces detailed provisions on remuneration, malus, clawback, and retention periods for material risk takers and control function staff.

What it means for you

Payments banks must now comply with stricter governance standards similar to universal banks, enhancing board oversight and risk management. The exemption for non-scheduled payments banks on CRO, CFO, and CTO appointments provides some relief, but they still need to meet other governance requirements. Banks will need to review and update their board appointment processes, remuneration policies, and committee structures to align with these directions.

What you must do

Who it affects

All payments banks (scheduled and non-scheduled), Board of directors and independent directors of payments banks, MD&CEO, whole-time directors, and part-time chairmen, Chief Risk Officer, Chief Financial Officer, Chief Technical Officer, Material risk takers and control function staff

❓ Common questions

Are non-scheduled payments banks fully exempt from these directions?

No, they are exempt only from Chapter VII (Appointment of CRO) and Chapter VIII (Appointment of CFO and CTO). All other chapters, including board constitution, director fit-and-proper criteria, committees, and remuneration norms, apply fully.

What is the effective date of these directions?

The directions came into force with immediate effect from November 28, 2025, the date of issuance.

Do these directions replace any existing RBI guidelines for payments banks?

Yes, Chapter XI provides for repeal of previous directions on payments bank governance. Banks should refer to the full text for specific repealed circulars.

📜 Read the original circular — full text as issued by RBI
Qualification : Engineering Graduate or MCA or equivalent qualification from a recognized University / Institution. Experience : Fifteen years of experience in relevant areas viz. Banking-IT related areas / projects involving IT Policy and Planning / Financial Networks and Applications / Financial Information Systems / Cyber Security Technologies / Payment Technologies, etc., of which five years shall be at senior management level.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DOR/2025-26/209 · issued 28 Nov 2025. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All payments banks (scheduled and non-scheduled), Board of directors and independent directors of payments banks, MD&CEO, whole-time directors, and part-time chairmen, Chief Risk Officer, Chief Financial Officer, Chief Technical Officer, Material risk takers and control function staff), your first concrete step on “RBI Issues New Governance Directions for Payments Banks” is: “Review and update board appointment due diligence processes to include fit-and-proper criteria as per Annex I format.” (RBI issued this 28 Nov 2025).

  1. Circular: RBI/DOR/2025-26/209 -- RBI Issues New Governance Directions for Payments Banks
  2. Issued: 28 Nov 2025
  3. Action required: Review and update board appointment due diligence processes to include fit-and-proper criteria as per Annex I format.
  4. Action required: Ensure board committees (Nomination and Remuneration, Audit) are constituted as per Chapter VI.
  5. Action required: Align remuneration policies with malus, clawback, and retention period requirements for material risk takers and control function staff.
  6. Action required: Non-scheduled payments banks: confirm exemption applicability for CRO, CFO, and CTO appointments and plan compliance for other chapters.
  7. Action required: Submit required regulatory approvals and reporting as per Chapter X within stipulated timelines.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13099&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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