Reserve Bank of India (Payments Banks - Compliance Function) Directions, 2026
UR
- Applies toPayments banks
- StatusIn force
- IssuedJul 31, 2026
- Amendmentsnone tracked
- Length33 points in 5 sections · 3 min read
The four dates on this rule
- PublishedJul 31, 2026The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyJul 31, 2026The 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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Opening paragraphs
1. Why this function exists
Compliance is part of a bank's assurance system, beside internal audit and risk management.
Chapter I. Preliminary
1. In force at once
These rules came into force on the day they were issued.
2. Who is covered
These rules apply to every payments bank.
3. What compliance risk is
Compliance risk is the punishment, money loss, or lost trust a bank faces for breaking the rules.
Chapter II. Governance and Oversight
Do it
1. Policy reviewed yearly
The board must have a compliance policy in place and review it at least once a year.
2. Audit kept separate
Compliance and internal audit must be kept separate functions.
3. The chief executive's duty
The bank's chief must make sure the function exists, stays independent, and the policy is followed.
4. Action on breaches
When rule breaks are found, management must fix them and punish where due.
5. A yearly risk map
Management must identify and assess the bank's main compliance risks at least once a year.
6. Failures reported promptly
Any material compliance failure must be reported promptly to the board or its audit committee.
Background
7. The board owns it
The board answers for the compliance function and for the bank's compliance risk.
8. A quarterly review
The board or its audit committee reviews the compliance function every quarter, with a detailed annual review.
Chapter III. Scope, Structure and Responsibilities
Must know
1. Never audit duty
Compliance staff may never be assigned audit or inspection duty; that is a conflict of interest.
Do it
2. A head office department
A compliance department must be set up at the bank's head office, headed by the chief compliance officer.
Background
3. Codes count too
The function covers the law, RBI's rules, and the codes of industry bodies.
4. Every unit has one
Every office and branch names its own compliance official, who reports to the chief compliance officer.
5. The central role
The head office department identifies the compliance risk in each business line, product and process.
BankPulse example. Two departments disagree about how much compliance risk a new process carries. The compliance function plays the central role in identifying the level of compliance risk in the organisation. It is not one voice among several.
6. Circulars vetted first
The function vets the bank's own circulars against the regulations before they go out to operating units.
Chapter IV. Chief Compliance Officer
Must know
1. The age cap
The officer must not be over 55 years of age at appointment, with a continuity exception.
BankPulse example. A candidate aged 54 may be appointed. A candidate aged 56 may not be, because the age at appointment must not be more than 55.
2. Fifteen years behind them
The officer needs 15 years of overall experience, at least five of them in control functions.
BankPulse example. An officer needs at least 15 years in banking or financial services. At least five of those 15 years must be in audit, finance, compliance, legal or risk. So 20 years in banking with only three years in those functions is not enough.
3. Three years minimum
The appointment is for a fixed tenure of not less than three years.
Do it
4. Tell RBI first
RBI must be told in advance before the officer is appointed, transferred early, or removed.
Background
5. An independent chief
The function is headed by a chief compliance officer, who may be recruited from outside the bank.
6. Fit and proper first
The officer is chosen through a defined selection process with a fit and proper evaluation; the board decides.
7. A clean record
No vigilance case or adverse RBI observation may be pending against the candidate.
8. Hard to remove
Moving or removing the officer early needs rare grounds and the board's clear prior approval.
9. A senior rank
The officer holds senior rank, not below two levels from the chief executive.
10. A private quarterly meeting
If the officer reports to the chief, the audit committee meets the officer alone every quarter.
11. No business targets
The officer reports to no business vertical and carries no business targets.
12. One hat only
No dual hatting: the officer takes no role that conflicts with compliance, and sits on committees only as an adviser.
13. Reach everything
The officer may speak to any staff member and open any record needed for compliance work.
Chapter V. Use of Technology for Monitoring
1. One dashboard
The bank needs workflow tools that track compliance and give management one dashboard view of the whole bank.
Chapter VI. Repeal and Other Provisions
1. What it replaces
Earlier compliance function circulars for this class of bank stand repealed by these Directions.
The same subject for other kinds of institution
The same subject for other kinds of institution.
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