Reserve Bank of India (Commercial Banks - Governance) Directions, 2025
UR
- Applies toCommercial banks
- StatusIn force
- RBI text changedRBI updated this document on October 01, 2026. BankPulse is re-reading it.
- IssuedNovember 28, 2025
- Last amendedJul 30, 2026 · 2 incorporated
- Length41 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNovember 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Chapter I. Preliminary
1. Governance rules for banks
This document sets the governance rules a commercial bank's Board and management work under.
2. Public banks follow chapter two
A public sector bank follows Chapter II where it does not clash with its own statute.
3. Non-scheduled banks exempt
A non-scheduled commercial bank is outside the risk officer and finance officer rules.
Chapter II. Public Sector Banks
Must know
1. Chair stays off audit
The chair of the Board must not sit on the audit committee.
2. Audit chair sanctions nothing
The audit committee chair must not sit on any committee that sanctions credit.
3. Age between 35 and 67
A candidate for election must be between 35 to 67 years old on the cut-off date.
BankPulse example. A candidate is 34 years old on the cut-off date for nominations. He is not eligible. The age must be between 35 to 67 years on that date.
4. Clean record needed
A candidate must not be under adverse notice of a regulator or be a defaulter.
5. Two years before work returns
No professional work may go to a former elected director for two years after office.
6. CRO removal reporting
A bank must report early removal of its Chief Risk Officer to RBI.
7. Keep vigilance off business
The chief vigilance officer must not hold investment, credit or premises work.
8. One outside board only
No officer may sit on more than one assisted company's board.
Do it
9. Watch the control culture
The Board must build and hold a culture of control inside the bank.
10. Chair must be independent
The chair of a public sector bank Board must be an independent director.
11. Half must be independent
At least half the directors at a Board meeting must be independent.
12. RBI letters to the Board
Every RBI and Government direction must be placed before the Board with background.
13. Only non-executives on audit
The audit committee must be made up only of non-executive directors.
14. Two thirds independent at audit
At least two thirds of those at an audit committee meeting must be independent.
15. Risk committee mostly non-executive
The risk committee must have a majority of non-executive directors.
16. One member knows risk
At least one member at a risk committee meeting must be qualified in risk management.
17. Only non-executives on nomination
The nomination and pay committee must be made up only of non-executive directors.
18. Nomination Committee mix
At least half the directors attending a Nomination Committee meeting must be independent directors.
19. A graduate at least
A candidate must at least be a graduate.
20. Policy for the risk officer
The Board must set out in a policy what the chief risk officer does.
21. Tell the stock exchange
A listed bank must also tell the stock exchanges when the risk officer changes.
22. Split risk from sanction
Credit risk management must be kept apart from the credit sanction process.
23. Vigilance officer rank
The chief vigilance officer should be of at least general manager rank.
24. A company secretary needed
The bank must appoint a qualified company secretary as secretary to the Board.
Background
25. Four roles for the Board
The Board has four roles: risk, control, expert management and the interests of owners.
26. One third or three
The Board quorum is one third of its strength or three directors, whichever is higher.
27. Board meeting quorum
Board meetings need at least one-third of directors, or three, present.
28. Audit quorum of three
The audit committee meets at least once a quarter with a quorum of three members.
29. Risk quorum of three
The risk committee meets at least once each quarter with a quorum of three members.
30. Risk officer's fixed term
The chief risk officer is appointed for a fixed term with the Board's approval.
31. Adviser, not decision maker
Where the risk officer is outside the sanction process, the role is advisory only.
32. Invited but no vote
As an adviser the risk officer attends the sanction committee without a vote.
Chapter III. Private Sector Banks
1. Eight-year tenure cap
A part-time director's total tenure on a private bank board is capped at eight years.
2. Retirement at 75
Directors and the Board Chair must retire from the board at age 75.
3. Whole-time directors
A private bank must have at least two whole-time directors, including the MD&CEO.
4. MD&CEO age cap
A private bank's MD&CEO or whole-time director must retire by age 70.
5. Three-year cooling gap
A director can return to the same board only after a three-year gap.
Chapter V. Repeal and other provisions
1. Old actions preserved
Action already started under the old rules stays governed by those old rules.
How this rule has changed
The points above are the rule as it stands today, after every change listed here.
Issued on November 28, 2025. This is the date RBI put the rule out.
Changed on Jul 14, 2026. Takes effect From October 01, 2026. Exceptions and conditions are stated in the amendment..
- Policies before Board. Banks must follow Appendix I for which policies need full Board approval and which approvals can be delegated.
- Delegating policy review. Board committees may review Board-approved policies, but the Board must clear any important changes in them.
- Non policy Board items. Banks must use Appendix II A for non-policy items that need Board approval, review or information.
- Delegable non policy items. The Board may delegate non-policy matters listed in Appendix II B, if it chooses to do so.
Changed on Jul 30, 2026. Takes effect From April 1, 2027..
- Share linked pay. Private banks must count share linked instruments as part of staff variable pay.
- Share grant norms. Private banks must write norms for giving share linked instruments in line with law and their pay policy.
- Fair value method. Private banks must fair value share linked instruments on grant date using the Black Scholes model.
- Expense recognition. Banks must book the fair value of share linked instruments as expense from the approved accounting period.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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