IRDAI Regulatory Reforms

IRDAI Authority, at its meeting held on 28 July 2026, approved a package of significant regulatory reforms. These are policy decisions that will subsequently be implemented through regulations, guidelines or amendments. They represent some of the most important insurance-sector developments of the week.

The key reforms approved include:

• Revised Investment Regulations – Approval of a revamped investment framework intended to provide insurers with greater flexibility in managing investment portfolios while maintaining prudent risk management and policyholder safeguards.
• Capital Infusion Framework – Approval of revised norms governing capital raising and infusion by insurers, aimed at facilitating timely access to capital and supporting business growth.
• Streamlined Registration of Insurance Intermediaries – Simplification of the registration and approval process for insurance intermediaries to reduce procedural delays and improve ease of doing business.
• Enhanced Policyholder Protection Measures – Approval of reforms intended to strengthen consumer protection, improve service standards and reinforce the regulatory framework governing policyholder interests.
• Strengthened Regulatory and Enforcement Framework – Measures to modernise supervisory and enforcement processes, with the objective of improving regulatory efficiency, transparency and governance across the insurance sector..

Why these reforms matter

Collectively, these decisions indicate IRDAI's continued focus on:

• improving the ease of doing business in the insurance sector;
• strengthening insurers' financial and operational flexibility;
• simplifying regulatory processes for market participants;
• enhancing policyholder protection; and
• encouraging competition and innovation while maintaining robust regulatory oversight.

These Authority approvals are high-level policy decisions. The precise compliance obligations for insurers, intermediaries and other regulated entities will become clear only after IRDAI issues the corresponding regulations, circulars or detailed operational guidelines. Until then, these should be viewed as approved policy reforms rather than immediately operative compliance requirements.

Certification Requirements for Distribution of Specialized Investment Funds (SIFs)

The Securities and Exchange Board of India (SEBI), through its circular dated 21 July 2026, has revised the certification requirements applicable to persons engaged in the distribution of Specialized Investment Funds (SIFs). The circular modifies Paragraph 21.10 of the SEBI Master Circular for Mutual Funds dated 20 March 2026, following industry representations and consultations with the National Institute of Securities Markets (NISM). The revised framework comes into force with immediate effect.

1. Background

SEBI had introduced the regulatory framework for Specialized Investment Funds (SIFs) through its circular dated 27 February 2025, which was subsequently incorporated into Chapter 21 of the SEBI Master Circular for Mutual Funds, 2026. The present circular revisits the certification framework to simplify distributor qualification requirements and facilitate smoother implementation of the SIF regime.

2. Revised Certification Framework

The circular introduces a new certification regime for SIF distributors with the following key features:

(a) Introduction of NISM Series V-D Certification

Persons engaged in the sale and/or distribution of Specialized Investment Fund products are now required to hold a valid "NISM Series V-D – Mutual Fund – Specialized Investment Fund Distributors Certification."

Importantly, holders of this certification will automatically be eligible to distribute both Mutual Fund products and Specialized Investment Fund products, without the need to separately obtain the existing NISM Series V-A – Mutual Fund Distributors Certification.

(b) Existing Mutual Fund Distributors

Entities engaged only in the distribution of conventional Mutual Fund products will continue to be governed by the existing NISM Series V-A Certification requirements. Accordingly, no change has been made to the certification requirements applicable to distributors who do not deal with SIF products.

(c) Discontinuation of NISM Series XIII Requirement

The earlier requirement of holding the NISM Series XIII – Common Derivatives Certification for distribution of SIF products will cease to apply after 21 September 2026.

(d) Transitional Arrangement

To ensure a smooth transition, SEBI has provided that distributors who possess a valid NISM Series XIII – Common Derivatives Certification obtained on or before 21 September 2026 will not be required to obtain the new NISM Series V-D Certification until the expiry of their existing Series XIII certification.

However, during this transition period, such distributors must continue to maintain a valid NISM Series V-A Mutual Fund Distributors Certification under the earlier framework.

3. Responsibilities of AMFI and AMCs

The circular specifically casts responsibility on:

• Association of Mutual Funds in India (AMFI); and
• Asset Management Companies (AMCs)

to ensure that distributors and agents comply with the revised certification requirements. This reinforces the supervisory role of AMCs and AMFI in maintaining regulatory compliance within the distribution ecosystem.

4. Regulatory Significance

The revised certification framework represents a rationalisation of qualification requirements for SIF distributors.

Instead of requiring distributors to maintain multiple certifications, SEBI has introduced a dedicated certification specifically tailored for Specialized Investment Funds. At the same time, the regulator has ensured that existing distributors are not adversely affected by providing a clearly defined transition mechanism.

The changes are expected to:

• simplify certification requirements;
• reduce duplication in professional qualifications;
• enhance the quality and standardisation of SIF distribution;
• facilitate smoother onboarding of distributors; and
• strengthen investor protection by ensuring distributors possess product-specific expertise.

5. Compliance Implications

The circular has immediate implications for:

• Asset Management Companies (AMCs);
• Mutual Fund distributors;
• Specialized Investment Fund distributors;
• AMFI; and
• Training and compliance functions responsible for distributor certification.

Entities should:

1. Review the certification status of all distributors dealing in SIF products.
2. Identify personnel who will require the NISM Series V-D Certification.
3. Monitor the transition period ending 21 September 2026.
4. Update internal compliance manuals, onboarding processes and distributor eligibility criteria.
5. Ensure that distributors continue to maintain valid certifications throughout the transition period.
6. Strengthen monitoring systems to ensure ongoing compliance with the revised framework.

6. Overall Assessment

The circular is a facilitative regulatory measure aimed at simplifying the certification architecture governing Specialized Investment Fund distribution while preserving appropriate competency standards.

The introduction of the NISM Series V-D Certification creates a dedicated qualification specifically aligned with SIF products and simultaneously removes the need for duplicate certifications. The transitional provisions also provide adequate time for existing distributors to migrate to the new framework without disrupting business operations.

For AMCs and AMFI, the circular places increased emphasis on monitoring distributor qualifications and ensuring compliance with the revised certification regime. Overall, the amendments strike a balanced approach between regulatory simplification, professional competency and investor protection, thereby supporting the orderly development of the Specialized Investment Fund ecosystem.

UGC – Promotion of Solid Waste Management and Implementation of Solid Waste Management Rules, 2026 in Higher Educational Institutions

The University Grants Commission (UGC) has issued a communication dated 28 July 2026 concerning the promotion of Solid Waste Management and implementation of the Solid Waste Management Rules, 2026 in Higher Educational Institutions (HEIs).

The communication is relevant to universities, colleges and other higher educational institutions and underscores the need for the higher education sector to contribute actively towards responsible waste management and environmental sustainability.

Higher Educational Institutions, given the scale of their campuses and the volume of waste generated through academic, residential, administrative and other activities, have an important role to play in establishing effective systems for segregation, collection, processing and appropriate disposal of solid waste. The UGC's communication therefore signals the importance of integrating sustainable waste-management practices into the regular functioning and institutional governance of HEIs.

Key Implications for Higher Educational Institutions

HEIs should review their existing solid waste management practices and assess their alignment with the applicable requirements of the Solid Waste Management Rules, 2026. Institutions should also examine the adequacy of their internal systems for waste segregation and disposal and identify areas requiring strengthening.

The communication may have implications across various operational areas, including:

• Segregation of waste at source and appropriate handling of different categories of waste;

• Establishment of suitable mechanisms for collection, storage, processing and disposal of solid waste;

• Reduction of waste generation and promotion of reuse, recycling and resource recovery;

• Engagement with appropriate authorised agencies or local authorities, wherever required;

• Creation of awareness among students, faculty, staff and other campus stakeholders;

• Incorporation of waste management and sustainability into institutional policies and campus practices; and

• Maintenance of appropriate records and documentation to demonstrate compliance with applicable requirements.

Compliance and Governance Perspective

From a compliance perspective, HEIs should undertake a gap assessment of their existing waste-management framework against the requirements applicable to them under the Solid Waste Management Rules, 2026. The assessment should cover the institution's campus operations, hostels, canteens, residential facilities, laboratories and other areas generating solid waste, as relevant.

Institutions may also consider assigning clear responsibility for implementation and monitoring of waste-management practices to an appropriate administrative or sustainability function. Periodic monitoring and internal reporting would help ensure that waste-management measures are implemented consistently rather than treated as a one-time compliance exercise.

Overall Assessment

The UGC communication represents a further emphasis on environmental sustainability and responsible institutional governance within the higher education sector. It reinforces the expectation that Higher Educational Institutions should adopt systematic and sustainable approaches to solid waste management and align their campus operations with the applicable regulatory framework.

Universities and colleges should accordingly review their existing practices, undertake a compliance gap assessment and strengthen their institutional mechanisms for waste segregation, recycling, processing and responsible disposal, while promoting greater awareness and participation among the campus community.

Note: The UGC's public notice page confirms the publication of the communication on 28 July 2026. The precise compliance obligations and implementation requirements should be assessed with reference to the full text of the UGC communication and the applicable provisions of the Solid Waste Management Rules, 2026.

Submission of Self-Contained Note and other related documents to the Office of the Insurance Ombudsmen

 The Insurance Regulatory and Development Authority of India (IRDAI), through its circular dated 23 July 2026, has issued important directions to all insurers, other than reinsurers, regarding the timely submission of Self-Contained Notes (SCNs), supporting documents and additional information sought by the Offices of the Insurance Ombudsman.

1. Background and Rationale

IRDAI has expressed concern over inordinate delays by insurers in submitting SCNs, supporting documents and additional information required by Insurance Ombudsman offices. It has also noted that insurers have been providing follow-up information piecemeal and with considerable delay, resulting in delays in the disposal of complaints raised by policyholders and beneficiaries.

The circular emphasises that timely availability of the SCN and supporting material is essential for the Insurance Ombudsman to properly examine the facts of a complaint and arrive at a decision. The requirement is also linked to Rule 15(2) and Rule 17(4) of the Insurance Ombudsman Rules, 2017, with Rule 17(4) requiring a complaint to be decided within 90 days of receipt of all requirements from the complainant.

2. Key Timelines Prescribed

The circular establishes clear timelines for insurers:

Requirement	Timeline
Submission of Self-Contained Note (SCN) with relevant supporting documents	Within 7 days of receipt of notice from the concerned Insurance Ombudsman office
Submission of additional information/documents sought under Rule 15(2)	Within 3 days of receipt of notice
Submission of information and documents	In one go, and not piecemeal
Clearance of all pending SCN and document/information requirements existing as on the date of the circular	Within 30 days from issuance of the circular

These requirements are expressly intended to facilitate timely disposal of complaints and improve the overall efficiency of the Insurance Ombudsman system.

3. Significant Consequence of Non-Compliance

The most significant aspect of the circular is the consequence for insurers that fail to comply with the prescribed timelines.

Where an insurer does not provide the required SCN, information or documents within the prescribed time, the concerned Insurance Ombudsman office may proceed with the matter ex parte, without further delay, based on the material information available on record.

This is a material compliance risk for insurers because failure to submit information within the prescribed timelines could result in the insurer losing the opportunity to place its complete factual and documentary position on record before the Ombudsman.

4. Compliance Implications for Insurers

The circular requires insurers to strengthen their internal processes for handling Insurance Ombudsman matters. In particular, insurers should ensure:

• Immediate identification and escalation of Ombudsman notices;
• Clear ownership of each Ombudsman complaint within the organisation;
• Preparation and submission of a complete SCN with all relevant supporting documents within seven days;
• A mechanism to respond to subsequent requests for information within three days;
• Submission of all relevant information and documents comprehensively in a single consolidated response;
• Maintenance of a centralised tracker for all pending Ombudsman matters and deadlines; and
• Immediate review and closure of all pending requests covered by the circular within the 30-day transition window.

5. Operational and Governance Impact

The short timelines prescribed by IRDAI make this more than a routine documentation requirement. Insurers will need to ensure cross-functional coordination between grievance redressal teams, legal departments, claims departments, underwriting teams, compliance functions and the relevant business units.

The requirement to submit information "in one-go" also indicates IRDAI's expectation that insurers should undertake a comprehensive review of each case before responding, rather than adopting an incremental approach to document submission.

From a governance perspective, insurers may consider reporting the status of Ombudsman cases and compliance with prescribed timelines to their senior management and relevant oversight committees, particularly where delays or repeated non-compliance are identified.

6. Key Risk Areas

The principal risks arising from non-compliance include:

1. Ex parte proceedings before the Insurance Ombudsman;
2. Inability of the insurer to place its complete defence or factual position on record;
3. Potential adverse outcomes in complaints due to incomplete documentation;
4. Increased regulatory scrutiny of the insurer's grievance redressal mechanism;
5. Reputational impact arising from delayed complaint resolution; and
6. Possible governance concerns where repeated delays indicate deficiencies in internal complaint-handling processes.

7. Overall Assessment

The circular represents a clear regulatory push by IRDAI towards speedier and more efficient resolution of policyholder and beneficiary grievances. While the circular does not introduce a new substantive obligation regarding the merits of insurance claims, it significantly strengthens the procedural discipline and response timelines expected from insurers in proceedings before the Insurance Ombudsman.

The seven-day timeline for SCNs, three-day timeline for additional information, and the requirement to provide information comprehensively rather than piecemeal should be treated as critical operational compliance requirements. The possibility of ex parte disposal in cases of non-compliance materially increases the importance of timely and complete responses.

In practical terms, insurers should immediately review their existing Insurance Ombudsman case-management processes, establish robust escalation mechanisms and ensure that every notice received from an Ombudsman office is tracked against the prescribed three-day and seven-day deadlines. The 30-day requirement for clearing all pending requests also calls for an immediate internal audit of outstanding SCNs, documents and information sought by the Ombudsman offices.

RBI (Commercial Banks – Credit Facilities) Fifth Amendment Directions, 2026

 The Reserve Bank of India (RBI), through its notification dated 15 July 2026, has issued the RBI (Commercial Banks – Credit Facilities) Fifth Amendment Directions, 2026, amending the RBI (Commercial Banks – Credit Facilities) Directions, 2025. The amendment has been issued under Sections 21 and 35A of the Banking Regulation Act, 1949 and comes into force with immediate effect.

1. Financing of Projects Capable of Being Operationalised as Multiple Independent Units

The amendment inserts an Explanation to paragraph 78 of the principal Directions. Where a project can be operationalised as multiple independent and viable units, a bank may, at its discretion, finance these independent units as separate projects, each having its own financial closure.

However, an important safeguard has been prescribed: each individual unit must be appraised ex-ante for standalone viability.

2. Implications for Project Finance

This amendment provides greater flexibility to banks in structuring and financing large projects that can be divided into independently viable components.

The provision could be particularly relevant where a project consists of several discrete units that can be commissioned and operated independently. Instead of necessarily treating the entire project as a single financing proposition, banks now have the discretion to consider individual viable units as separate projects, subject to separate financial closure and prior assessment of their standalone viability.

From a credit appraisal perspective, the amendment potentially enables:

• Phased financing of large projects;
• More focused assessment of individual project units;
• Financing structures aligned with the actual commissioning schedule;
• Potentially more efficient deployment of bank credit; and
• Greater flexibility in dealing with projects involving multiple independently viable components.

However, the requirement for ex-ante appraisal of standalone viability is significant. The amendment should not be interpreted as permitting banks to arbitrarily divide an otherwise integrated project merely to facilitate financing. The individual units must independently demonstrate viability at the appraisal stage.

3. Electricity Generation Projects – Transmission and Evacuation Infrastructure

A second amendment has been made to paragraph 80. For electricity generation projects where the project scope includes both generation and transmission (evacuation infrastructure), the right-of-way requirement for the transmission component may be determined in accordance with sub-paragraph (3) of the relevant provision.

This clarification appears aimed at addressing the specific characteristics of power generation projects where transmission infrastructure is an integral part of the overall project scope. It provides greater clarity regarding the determination of right-of-way requirements for the transmission or evacuation component.

4. Key Regulatory Impact

The amendment is primarily a regulatory clarification and facilitation measure for project finance by commercial banks. Its principal significance lies in providing banks with greater discretion in structuring credit facilities for projects that can be broken down into multiple independently viable units.

At the same time, RBI has retained a clear prudential safeguard by requiring standalone viability to be assessed before financing each unit. This ensures that the flexibility introduced does not dilute the quality of credit appraisal.

The clarification relating to electricity generation projects should also assist banks in dealing with financing structures involving both generation capacity and associated transmission infrastructure.

5. Action Points for Banks

Banks should consider the following actions:

1. Review existing project finance policies in light of the amended paragraph 78.
2. Establish clear internal criteria for determining when a project can be treated as comprising multiple independent viable units.
3. Ensure that standalone viability appraisal is undertaken ex-ante for every unit proposed to be financed separately.
4. Review documentation and financial closure processes where separate project financing is adopted.
5. Update credit appraisal and project finance manuals, wherever necessary.
6. Review financing frameworks for electricity generation projects involving transmission/evacuation infrastructure to ensure compliance with the amended paragraph 80.
7. Ensure that relevant credit, legal and project finance teams are made aware that the amendments are effective immediately.

Overall Assessment

The RBI amendment is a targeted measure aimed at providing greater flexibility in project financing without compromising prudential credit assessment. The ability to finance independently viable units as separate projects may facilitate more efficient financing of complex, multi-unit projects and potentially support phased project development.

For banks, however, the key compliance consideration is the requirement that each unit must be independently assessed for standalone viability before financing. The amendment therefore provides flexibility in financing structures, but does not relax the fundamental requirement of sound and independent credit appraisal.

The clarification concerning transmission/evacuation infrastructure in electricity generation projects is also likely to provide greater certainty in the appraisal and financing of power projects with integrated generation and transmission components. Overall, the amendment should be viewed as a facilitative change that enhances flexibility in project finance while preserving the underlying prudential discipline.

ISIN-level freezing of promoter and promoter group holdings, including associates, in buy-backs

 SEBI Circular dated 21 July 2026 concerning the operationalisation of the ISIN-level freezing of promoter and promoter group holdings, including associates, in the context of buy-backs. The circular is addressed to listed companies, stock exchanges, depositories, merchant bankers and other relevant intermediaries.

Professional Analysis

1. Background and Regulatory Context

SEBI's circular dated 21 July 2026 operationalises the amendment to the SEBI (Buy-back of Securities) Regulations, 2018, introduced through the notification dated 1 July 2026. The amendment inserted Regulation 24(i)(ea), which requires the shares or other specified securities held by the promoter and promoter group, including their associates, to remain frozen at the ISIN level during the prescribed buy-back period.

The freeze is intended to operate from the date of passing of the Board resolution or the special resolution, as applicable, until the closing of the buy-back offer. The framework, however, recognises two specific exceptions:

1. Promoter holdings may be tendered in a buy-back conducted through the tender offer route; and
2. Encumbrances created before commencement of the buy-back period may be invoked.

The circular therefore represents the implementation mechanism for the regulatory requirement introduced through Regulation 24(i)(ea), rather than creating an entirely independent substantive restriction.

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2. Key Regulatory Requirement

The principal change is the introduction of an ISIN-level freeze on promoter holdings during the relevant buy-back period.

The requirement covers securities held by:

• Promoters;
• Promoter group entities; and
• Their associates.

The freeze is to remain operative throughout the period beginning with the relevant resolution and ending with the closing of the buy-back offer. This is significant because the restriction is applied at the ISIN level, requiring system-based implementation through the depositories rather than relying solely on company-level monitoring or manual restrictions.

The framework nevertheless ensures that the freeze does not prevent promoters from participating in a tender-offer buy-back, thereby balancing the objective of restricting transactions in promoter holdings with the statutory ability of promoters to tender their securities in the buy-back.

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3. Role of Depositories

A major responsibility under the circular has been placed on the Depositories.

They are required to establish an operational framework and undertake the necessary system enhancements to implement the ISIN-level freeze. The framework must address, among other matters:

• The format in which listed companies are required to issue instructions for freezing promoter holdings;
• The operational process for implementing the ISIN-level freeze;
• Mechanisms to permit promoters to tender securities in a tender-offer buy-back;
• Procedures for invocation or release of pre-existing encumbrances; and
• Other operational and system requirements necessary for effective implementation.

The Depositories are required to have the operational framework and necessary system enhancements in place before 1 August 2026.

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4. Treatment of Encumbered Promoter Holdings

The circular specifically addresses encumbrances created before the commencement of the buy-back period.

Such encumbrances may continue to be invoked or released, notwithstanding the freeze. However, the circular makes it clear that the freeze will continue to apply to the securities that are invoked or released.

This is an important operational distinction. The ability to invoke or release an existing encumbrance does not appear to result in the removal of the ISIN-level freeze on the underlying securities.

Accordingly, companies and promoters should maintain accurate records of pre-existing encumbrances and ensure that the relevant information is properly communicated to the Depositories and other concerned intermediaries.

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5. Implications for Listed Companies

The circular has significant practical implications for listed companies contemplating a buy-back.

Before initiating the buy-back process, companies should ensure that they have a clear understanding of:

• The complete promoter and promoter-group shareholding;
• Holdings of promoter-group associates;
• The relevant ISINs;
• Existing encumbrances over promoter holdings;
• The timing of the Board or shareholder resolution;
• The proposed buy-back route; and
• The coordination requirements with the Depositories, RTA and Merchant Banker.

The company will also need to be prepared to issue appropriate instructions for freezing promoter holdings in the prescribed format and comply with the operational framework subsequently issued by the Depositories.

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6. Implications for Promoters and Promoter Group

The new mechanism could materially affect the ability of promoters and promoter-group entities to deal with their securities during the buy-back period.

Once the freeze becomes operational:

• Promoter holdings will be subject to an ISIN-level freeze;
• Normal transfers or other transactions may be restricted during the freeze period;
• Tendering in a tender-offer buy-back will remain permissible;
• Pre-existing encumbrances can be invoked or released in accordance with the framework;
• The freeze will continue to apply to securities affected by such invocation or release.

Promoters should therefore carefully evaluate any proposed pledge, invocation, release, transfer or other transaction involving their securities before the relevant buy-back resolution is passed.

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7. Implications for Company Secretaries and Compliance Teams

From a Company Secretary's perspective, this circular introduces an additional layer of transactional and procedural planning around buy-backs.

The following compliance checklist would be advisable:

Before the Board/Shareholder Resolution

1. Identify the complete promoter and promoter-group holding structure.
2. Verify holdings of promoter-group associates.
3. Reconcile shareholding data with the RTA and Depositories.
4. Identify all relevant ISINs.
5. Prepare a statement of existing encumbrances.
6. Identify any encumbrances created before commencement of the buy-back period.
7. Coordinate with the Merchant Banker, RTA and Depositories.
8. Understand the operational procedure prescribed by the Depositories.

After the Resolution

1. Issue instructions for freezing promoter holdings in the prescribed format.
2. Confirm implementation of the ISIN-level freeze.
3. Monitor promoter and promoter-group holdings throughout the buy-back period.
4. Ensure that permitted tendering of securities is appropriately processed.
5. Coordinate with Depositories regarding any invocation or release of pre-existing encumbrances.
6. Maintain appropriate documentary evidence of all instructions and communications.

Before Closure of Buy-back

The company should ensure that the freeze remains appropriately administered until the closing of the offer, while all permitted transactions and exceptions are properly documented.

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8. Overall Assessment

The circular marks an important move towards system-driven monitoring and restriction of promoter holdings during buy-backs. By shifting implementation to the ISIN level, SEBI is seeking to create a more robust and automated mechanism that can be administered through the Depository infrastructure.

The framework is particularly significant because it brings together listed companies, promoters, promoter-group entities, associates, Depositories, Stock Exchanges, Merchant Bankers and RTAs within a common operational framework. The success of the mechanism will therefore depend heavily on effective coordination and system integration among these stakeholders.

Key takeaway

With effect from 21 July 2026, the SEBI circular operationalises the ISIN-level freezing of promoter, promoter-group and associate holdings during a buy-back period. Depositories are required to implement the necessary systems before 1 August 2026. While tendering in a tender-offer buy-back and invocation/release of pre-existing encumbrances are permitted, the freeze continues to apply in the manner specified by the framework. Listed companies proposing buy-backs should therefore factor this requirement into their transaction planning and immediately align their processes with the Depositories, RTA and Merchant Banker.

Professional view: The circular is particularly relevant for listed companies contemplating a buy-back in the near term. The Company Secretary should ensure that the promoter/promoter-group shareholding and encumbrance position is comprehensively mapped before the resolution initiating the buy-back is passed, as the commencement of the freeze is directly linked to that resolution. This should form part of the company's pre-buy-back compliance checklist and transaction timetable.

RBI (Local Area Banks – Governance) Amendment Directions, 2026

 

1. Executive Summary

The Reserve Bank of India has issued the Reserve Bank of India (Local Area Banks – Governance) Amendment Directions, 2026, dated 14 July 2026, with the objective of rationalising and consolidating the matters required to be placed before the Board of Directors of Local Area Banks. The stated purpose is to enable Boards to utilise their time more effectively and to facilitate a more focused and qualitative engagement with business strategy and risk governance.

The principal change is the replacement of the earlier framework relating to the "Calendar of Reviews and Board Meeting Procedures" with a broader framework titled "Matters to be placed before the Board." The revised framework introduces a structured classification of Board-level matters into:

1. Policies requiring Board approval, with specified scope for delegation;
2. Non-policy matters requiring Board approval, review or information/reporting; and
3. Non-policy matters that may be delegated at the discretion of the Board.

The amendments will come into force with effect from 1 October 2026.

The amendment represents a significant shift from a predominantly prescriptive approach to Board agenda management towards a principles-based governance model, while retaining clear accountability of the Board for the bank's overall strategy, financial soundness, key personnel decisions, organisational structure, governance, risk management and compliance obligations.

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2. Key Changes Introduced

A. Rationalisation of Board agenda requirements

The amendment deletes Paragraph 15 of Chapter IV and Paragraphs 20 and 21 of Chapter V of the existing Directions. Further, Chapter V is renamed from "Calendar of Reviews and Board Meeting Procedures" to "Matters to be placed before the Board."

This change indicates a clear regulatory intention to move away from a rigid calendar-driven approach and towards a substance-based governance framework.

The focus is therefore shifting from simply ensuring that prescribed matters appear periodically on the Board agenda to ensuring that the Board receives the right information, at the right frequency, with adequate time for meaningful deliberation.

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B. Three-tier classification of Board matters

The newly inserted Paragraph 21A establishes three broad categories:

Category	Regulatory Treatment
Policies	Board approval required, with specified areas capable of delegation
Non-policy matters	Board approval / review / information as specified in Appendix II-A
Delegable matters	May be delegated at the Board's discretion as specified in Appendix II-B

The framework also permits the review of policies that are required to be approved by the Board to be delegated to Board Committees, while requiring the Board itself to approve material amendments to such policies.

This is an important distinction: delegation does not amount to abdication of responsibility. The Board continues to retain oversight and accountability while allowing detailed review and operational governance to be undertaken by appropriate committees.

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3. Enhanced Role and Responsibility of the Board

The amended framework expressly reiterates that the Board retains ultimate responsibility for:

• Business strategy;
• Financial soundness;
• Key personnel decisions;
• Internal organisation;
• Governance structures and practices;
• Risk management; and
• Compliance obligations.

At the same time, the Board may delegate appropriate matters to Board Committees or Management Committees, together with suitable reporting requirements.

The Board is also required to clearly articulate:

• Matters reserved exclusively for Board approval;
• Matters to be brought to the Board for information;
• Matters requiring periodic reporting; and
• Matters delegated to committees.

The regulatory framework specifically requires the Board to ensure that adequate time is devoted to strategy and risk governance.

This is perhaps the most important governance message emerging from the amendment. The RBI is effectively encouraging Boards to move away from spending disproportionate time on routine or transactional matters and instead focus on strategic oversight, financial resilience, risk management and governance quality.

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4. Greater Responsibility of the Chairperson

The amendment specifically places the primary responsibility for setting the agenda of Board meetings on the Chairperson.

This strengthens the governance role of the Chairperson and makes the Board agenda a more deliberate governance instrument rather than merely a compilation of matters submitted by management.

The Chairperson should therefore ensure that:

• Strategic matters receive adequate agenda time;
• Emerging risks are discussed proactively;
• Material regulatory developments are brought before the Board;
• Matters requiring Board judgment are not diluted by excessive routine reporting;
• Delegated matters are periodically reviewed; and
• The Board receives sufficiently detailed and timely information.

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5. Importance of Management Information

The amended framework places a clear responsibility on the Board to ensure that it receives sufficient information from management to discharge its responsibilities effectively.

The Board is expected to specify:

• The nature of information required;
• The frequency of information/reporting;
• The format and quality of Board papers; and
• The circumstances in which external reports may be sought.

The Board is also expected to periodically review the matters placed before it and those delegated to Board or Management Committees. This review must include the timeliness of circulation of agenda items, adequacy of information in Board papers and the time allotted to important matters.

This creates an important governance obligation for management and the Company Secretary/Board Secretariat. Board effectiveness will increasingly depend not merely on the frequency of meetings but on the quality, timeliness and relevance of information provided to directors.

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6. Policy Framework – Key Implications

Appendix I provides a detailed framework of policies to be placed before the Board for approval.

The broad policy areas include:

• Credit Policy;
• Investment Policy;
• Risk Management Policy;
• Outsourcing Policy;
• IT and Cyber Security Policy;
• Digital Banking and PPI Policy;
• Responsible Business/Lending Conduct;
• Banking Outlet Authorisation;
• Deposit and Liability Product Policy;
• Auditor Appointment and Remuneration Policy;
• Fit and Proper Policy for Major Shareholders;
• Compensation Policy;
• CSR Policy;
• Compliance Policy;
• Protected Disclosure Policy;
• Code of Conduct/Ethics Policy;
• KYC Policy; and
• Interest Rate Policy.

A significant feature is that most core risk, governance and compliance policies cannot be delegated, while certain operational or specialised aspects may be delegated to appropriately constituted Board Committees.

For example, core areas such as credit risk, cyber security, fraud risk management, compliance, compensation, fit and proper assessment of major shareholders and IT governance remain within the non-delegable policy framework.

This reflects the RBI's view that strategic risk and governance policies must remain firmly within the Board's oversight framework.

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7. Areas Where Delegation is Specifically Permitted

The amendment permits delegation in selected areas, including, subject to the specific conditions:

• Certain aspects of stressed asset resolution;
• Liquidity and ALM matters;
• Operational risk matters;
• Outsourcing;
• Responsible business conduct;
• Debit card issuance;
• Online Form A2 acceptance;
• Banking outlets and channels;
• Gold Monetisation Scheme;
• KYC matters, subject to specified exclusions;
• Interest rate matters; and
• Certain auditor-related matters to the Audit Committee.

The delegation is generally to a Board Committee to which appropriate powers have been delegated, rather than an unrestricted transfer of responsibility.

This provides Local Area Banks with greater flexibility in structuring their governance architecture according to their size, complexity and organisational requirements.

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8. Matters Requiring Board Approval, Review or Information

Appendix II-A identifies several significant matters that must continue to be placed before the Board.

These include, among others:

• Acquisition of shares or voting rights;
• Issuance of regulatory capital instruments;
• Reclassification of investment portfolio categories;
• Declaration of dividend;
• Voluntary amalgamation;
• RTGS membership;
• Appointment/reappointment of MD & CEO/PTC;
• Remuneration of WTD;
• Appointment of the Chief Compliance Officer;
• Certain business-through-brokers matters;
• Compromise settlements and technical write-offs;
• Customer service matters;
• Donations;
• Fit and proper status of major shareholders;
• Information security governance of payment aggregators and gateways;
• Operational resilience;
• Loans to related parties;
• Monitoring of major shareholder approvals; and
• Monitoring of encumbrance of shares.

The framework therefore preserves direct Board oversight over matters having a potentially significant impact on capital, ownership, senior management, governance, financial performance and regulatory compliance.

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9. Delegation to Board Committees

Appendix II-B provides a particularly important framework for delegation.

Among the matters that may be delegated, at the Board's discretion, are:

• Risk assessment methodology for Risk-Based Internal Audit;
• Annual Internal Audit Plan;
• Loans to directors and related persons;
• Operational manuals;
• Special assignments other than statutory audit;
• Annual Banking Outlet Expansion Plan;
• New correspondent banking relationships;
• Service providers connected with directors or key managerial personnel;
• Certain compromise settlements involving fraud or wilful defaulters;
• Long Form Audit Report;
• Investment portfolio review;
• Business Correspondent model;
• Banking outlet transaction monitoring;
• Doorstep banking;
• Material outsourcing;
• Effectiveness of Risk-Based Internal Audit;
• Cyber security risk review;
• Base rate and marginal cost of funds;
• NPA review;
• Customer service matters; and
• Various operational risk, compliance and fraud-related reports.

The delegation framework assigns these responsibilities to appropriate committees such as the Audit Committee of the Board, Risk Management Committee, Customer Service Committee, Asset Liability Committee and Committee on Lending to Related Parties.

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10. Major Governance Implications

10.1 Board agenda restructuring

Local Area Banks should undertake a comprehensive review of their existing Board agenda and Board calendar before 1 October 2026.

The exercise should identify:

• Matters that must continue to be approved by the Board;
• Matters that can be reviewed by Board Committees;
• Matters that may be delegated;
• Matters requiring periodic reporting;
• Matters that can be removed from routine Board agendas; and
• Matters that need to be escalated to the Board based on materiality.

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10.2 Review of Board Committee charters

The revised framework makes it necessary to review the Terms of Reference and Charter of each Board Committee.

The bank should ensure that:

• Delegated powers are expressly documented;
• Committee responsibilities are clearly defined;
• Reporting obligations to the Board are specified;
• Matters requiring escalation are identified;
• Material policy amendments are reserved for Board approval; and
• There is no overlap or ambiguity between Board and Committee responsibilities.

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10.3 Review of Board and Committee policies

The bank should map all existing policies against Appendix I.

Where several policies currently cover overlapping regulatory requirements, the bank may consider rationalising them into broader policy documents, provided all prescribed aspects are adequately covered. The amendment expressly allows banks to regroup policies, provided the specified aspects are captured in one or more policies.

This offers an opportunity to simplify the policy architecture and eliminate duplication.

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10.4 Enhanced role of the Company Secretary / Board Secretariat

From a governance perspective, the amendment is likely to significantly increase the importance of the Company Secretary/Board Secretariat function.

The function should ideally undertake a detailed mapping exercise covering:

RBI Requirement → Board/Committee → Approval/Review/Information → Frequency → Reporting Format → Escalation Requirement → Regulatory Reference

Such a matrix would provide an effective mechanism for ensuring that no mandatory Board-level matter is inadvertently omitted while allowing the Board agenda to become more focused.

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10.5 Strengthening of Board information systems

The amendment places considerable emphasis on the adequacy and timeliness of information supplied to directors.

Accordingly, Board papers should be reviewed to ensure that they contain:

• Executive summaries;
• Material risk indicators;
• Key regulatory developments;
• Exceptions and breaches;
• Financial implications;
• Management actions;
• Status of previous decisions;
• Matters requiring specific Board intervention; and
• Clear recommendations for decision-making.

Routine data without analysis should ideally be shifted to committee-level reporting wherever appropriate.

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11. Recommended Action Plan

In view of the effective date of 1 October 2026, the following action plan is recommended:

Immediate – July/August 2026

1. Constitute an internal implementation team.
2. Conduct a clause-by-clause mapping of the amendment.
3. Prepare an inventory of all existing Board and Committee agenda items.
4. Identify overlapping or repetitive reporting requirements.

August/September 2026

5. Review and revise Board Committee Charters.
6. Review Board-approved policies against Appendix I.
7. Identify matters eligible for delegation.
8. Define delegation limits and escalation thresholds.
9. Establish reporting mechanisms from Committees to the Board.
10. Review Board paper formats and information requirements.

Before 1 October 2026

11. Obtain necessary Board approvals for revised governance arrangements.
12. Update the Board calendar and annual agenda plan.
13. Update policy and committee matrices.
14. Train senior management and Board Secretariat personnel.
15. Establish a monitoring mechanism for compliance with the revised framework.

Post-implementation

16. Periodically review whether the revised Board agenda is actually creating more time for strategy and risk governance.
17. Assess the effectiveness of delegated authority.
18. Review whether Board Committees are receiving adequate information.
19. Ensure that material issues are escalated promptly to the Board.
20. Periodically reassess the Board's reserved matters and delegated matters.

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12. Overall Assessment

The amendment is best viewed not merely as a change in the frequency or manner of placing matters before the Board, but as a broader attempt by the RBI to improve the quality of bank governance.

The regulatory philosophy underlying the amendment appears to be that an effective Board should not become overwhelmed by routine operational matters at the expense of its core responsibilities relating to strategy, financial soundness, risk management, governance and compliance.

At the same time, the framework does not reduce Board accountability. Rather, it seeks to establish a more effective division of responsibility between the Board, Board Committees and Management Committees, while requiring the Board to maintain appropriate oversight.

For Local Area Banks, the amendment therefore presents both a compliance requirement and a governance opportunity. Banks should use the transition period before 1 October 2026 to redesign their Board governance architecture, rationalise their policy framework, strengthen committee oversight and improve the quality of Board information.

In my assessment, the most important implementation priority should be the creation of a comprehensive "Board and Committee Matters Matrix" mapping every existing regulatory requirement to its appropriate decision-making authority, reporting frequency and escalation mechanism. This would provide the clearest practical mechanism for demonstrating compliance with the revised RBI framework while ensuring that the Board's attention is directed towards matters of genuine strategic and risk significance.