Reserve Bank of India (Non-Banking Financial Companies – Governance) Directions, 2025 (Updated as on June 24, 2026)
UR
- Applies toFinance companies
- StatusIn force
- ImportanceMUST READ
- IssuedNov 28, 2025
- Last amendedJun 24, 2026 · 1 incorporated
- Length42 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNov 28, 2025The day RBI put this document out.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
Kept in your browser only. Your desk
Show me the points for
Nothing is removed from the page.
Numbers to remember
| 30 percent | Changing more than 30 percent of the directors, independent directors excluded, needs RBI's prior written permission. RBI Para 10 |
| 15 days | The statement must reach RBI's regional office within 15 days of the quarter's close. RBI Para 14(1) |
| ₹5,000 crore | A company with assets above ₹5,000 crore must appoint a chief risk officer with a clear role. RBI Para 19 |
| three years | An upper layer company must be listed within three years of RBI naming it to that layer. RBI Para 43 |
What it says
Chapter I. Preliminary
1. In force at once
These Directions came into force with immediate effect.
2. Who is covered
These Directions apply to finance companies layer by layer: the higher the layer, the more chapters apply.
3. Government companies partly out
The pay rules for key managers do not apply to Government owned finance companies.
Chapter II. Board approved policy and review
1. Policies the board must own
Middle and upper layer companies need board approved policies on fit and proper checks, compliance, pay and reviews.
Chapter III. Directions applicable to all NBFCs
1. A third of the board
Changing more than 30 percent of the directors, independent directors excluded, needs RBI's prior written permission.
2. One banker on board
At least one director must have worked in an NBFC or a finance company.
3. A risk committee for all
Every company must set up a risk committee. It may sit at board or executive level, and reports to the board.
4. Rotation needs no approval
Directors re-elected on retirement by rotation need no prior approval, but RBI must still be informed.
5. Through the portal
The application for a management change goes to RBI through the PRAVAAH portal.
Chapter IV. Directions applicable to NBFCs-Middle Layer (NBFCs-ML) and Upper Layer (NBFCs-UL)
Must know
1. Fifteen days to file
The statement must reach RBI's regional office within 15 days of the quarter's close.
BankPulse example. A quarter closes at the end of September. The statement must reach the Reserve Bank's regional office within 15 days of that close. So the last date is 15 October.
2. Big companies need risk chief
A company with assets above ₹5,000 crore must appoint a chief risk officer with a clear role.
3. No other hat at all
The chief risk officer may not be given any other responsibility.
4. Removal is reported
Removing the risk officer early needs board approval and a report to RBI's supervision office.
5. One company at a time
A key manager may not hold office in another middle or upper layer finance company, except a subsidiary.
Do it
6. March quarter audited
The statement for the March quarter must be certified by the auditors.
7. A compliance chief
The company must appoint a senior officer to head compliance, under a policy the board approves.
8. Variable pay can vanish
Variable pay must be truly variable and may fall to zero on poor performance.
9. A whistle blower channel
The company must have a whistle blower mechanism for directors and employees to report genuine concerns.
10. Subsidiaries governed too
The board must ensure good governance practices in the company's subsidiaries.
Background
11. Fit and proper always
A board approved policy checks directors' fit and proper status at appointment and on a continuing basis.
12. RBI can look anyway
RBI keeps the right to examine any company's directors' fit and proper status in the public interest.
13. The committee screens them
The names committee reads each director's declaration and decides whether to accept them.
14. A yearly declaration
Every March 31 directors declare their information unchanged, and sign deeds of covenants.
15. A quarterly certificate
Every quarter the company tells RBI who joined or left the board, with the chief's certificate.
16. Progress shown to board
The board periodically sees the progress of the risk system and conformity with governance standards.
17. An audit committee of three
The audit committee has at least three board members, with company law powers and duties.
18. Systems audited too
The audit committee makes sure the computer systems are audited as often as the rules say.
19. A nominations committee
The names and pay committee is built with the powers and duties the company law gives it.
20. Quarterly without the chief
If the risk officer reports to the chief executive, the risk committee meets them alone at least quarterly.
21. The risk chief stands free
The chief risk officer reports to the chief executive or the risk committee and carries no business targets.
22. Every product vetted
Every credit product, retail or wholesale, is vetted by the risk officer for inherent and control risks.
23. Three boards at most
An independent director may sit on the boards of at most three middle or upper layer finance companies.
24. Pay policy against risk
A board approved pay policy stops pay from rewarding reckless risk. It sets fixed and variable rules and take-back terms.
25. Control staff paid fixed
Risk, compliance and audit staff are paid independent of the businesses they oversee, mostly fixed.
26. No guaranteed bonus
Guaranteed bonus is out; only a joining bonus for new hires may be considered.
27. Pay can be taken back
Deferred pay faces malus and clawback on poor results or employee misconduct.
28. Own rules, published
The company writes its own governance rules, and the board approves them.
29. On the website
The guidelines go on the company's website for all stakeholders to see.
Chapter V. Directions applicable to NBFCs-Upper Layer (NBFCs-UL)
1. Three years to list
An upper layer company must be listed within three years of RBI naming it to that layer.
2. Leavers are reported
An upper layer company reports when an independent director is removed or resigns before their term ends.
Chapter VI. Repeal and other provisions
1. Old guidance repealed
The earlier governance guidance for these finance companies stands repealed.
2. Old actions stay governed
Action already taken under the old rules stays governed by them.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on Nov 28, 2025. This is the date RBI put the rule out.
Changed on Jun 24, 2026.
- start date. These amendment rules apply from the day the Reserve Bank issues them.
- scope of change. These amendment rules change the earlier governance rules for non-banking financial companies.
- government owned NBFC UL. Upper layer non-banking financial companies fully owned and controlled by Government do not need to follow these provisions.
The same subject for other kinds of institution
The same subject for other kinds of institution.
Other RBI rules for NBFCs
Every rule page on BankPulse · Questions bankers ask, answered