RBI/2026-27/179 dated 14 July 2026, titled “Reserve Bank of India (Payments Banks – Governance) Amendment Directions, 2026.” The amendment is primarily aimed at rationalising the matters required to be placed before the Board of a Payments Bank, thereby enabling the Board to devote greater time to strategy, financial soundness, risk governance and other matters of material importance. The amendments will come into effect from 1 October 2026.
Professional Analysis
1. Executive Summary
The Amendment Directions represent a significant shift from a high-frequency, prescriptive Board-agenda model towards a principles-based governance framework. Rather than requiring the Board to deal with every operational or regulatory matter directly, the RBI has introduced a structured framework that distinguishes between:
- Policies that must be approved by the Board;
- Policies whose review may be delegated to Board Committees, subject to Board approval of material amendments;
- Non-policy matters requiring Board approval, review or information/reporting; and
- Matters that the Board may, at its discretion, delegate to appropriate Board or Management Committees.
The fundamental principle remains that the Board retains ultimate responsibility for business strategy, financial soundness, key personnel decisions, internal organisation, governance, risk management and compliance. Delegation is therefore intended to improve governance efficiency and not to dilute the Board's overarching accountability.
2. Core Governance Change
A key amendment is the insertion of Paragraph 16A, which expressly requires the Board to exercise oversight over:
- the bank's risk management system, policy and strategy;
- exposures to related entities; and
- conformity with corporate governance standards, including committee composition, roles and functions, meeting periodicity, compliance coverage and review functions.
This is an important governance clarification. While the RBI is seeking to reduce the volume of routine matters reaching the Board, it simultaneously reinforces the Board's responsibility for oversight rather than operational micromanagement.
The amendment therefore appears to promote a more mature governance model in which the Board focuses on "what" and "why", while appropriately constituted committees and management structures deal with "how" and "when", within clearly defined delegated authority.
3. Rationalisation of Board Agenda
The newly inserted Paragraph 27A establishes a consolidated framework for matters to be placed before the Board. The Board must now distinguish between:
- policies requiring Board approval;
- policies where review may be delegated;
- non-policy matters requiring approval/review/information; and
- matters that may be delegated at the Board's discretion.
This is perhaps the most consequential operational change introduced by the amendment.
For Payments Banks, this should result in a more structured Board calendar, with routine regulatory matters capable of being handled by appropriately empowered committees, allowing Board meeting time to be concentrated on matters involving material risk, strategy, capital, liquidity, cyber security, compliance and governance.
4. Board Delegation – Important Qualification
The amendment does not amount to unrestricted delegation.
Paragraph 27B makes it clear that the Board must:
- clearly identify matters reserved for its approval;
- specify matters that are to be brought to its attention;
- consider statutory and regulatory responsibilities while determining delegation;
- ensure adequate information is received from management; and
- periodically review both the matters placed before the Board and those delegated to committees.
The Board Chairperson is also assigned the primary responsibility for setting the meeting agenda.
In practical terms, the amendment strengthens the importance of the Board's agenda-setting process. The agenda should no longer be viewed merely as a compilation of regulatory reporting requirements; it should become a deliberate governance instrument reflecting the Board's priorities.
5. Key Impact of Appendix I – Policies
Appendix I provides a comprehensive classification of policies that must be placed before the Board and identifies whether delegation is permissible.
A significant number of core risk and governance policies remain non-delegable, including:
- Investment Policy;
- Risk Management Policy;
- Cyber Security Policy;
- Fraud Risk Management roles and responsibilities;
- Chief Risk Officer roles and responsibilities;
- Digital Banking Policy;
- IT and Information Security-related policies;
- Policy relating to customer appropriateness, suitability and grievance redressal;
- Fit and Proper assessment of major shareholders;
- Compensation Policy;
- CSR Policy;
- Compliance Policy;
- Protected Disclosure Scheme;
- Code of Conduct/Ethics Policy.
This demonstrates that the RBI's approach is not to dilute Board responsibility in areas involving systemic, financial, regulatory or reputational risk.
At the same time, certain areas permit delegation. For example, aspects of:
- operational risk;
- liquidity risk/ALM;
- outsourcing;
- responsible business conduct;
- debit card issuance;
- KYC;
- interest rates on deposits; and
- certain banking-channel or outlet matters
may be delegated, subject to the specific conditions and committee structures prescribed in the Appendix.
6. Matters Requiring Board Approval, Review or Information
Appendix II-A identifies matters other than policies that continue to require Board-level attention.
These include significant matters such as:
- acquisition of shares or voting rights;
- issuance of regulatory capital;
- investment portfolio reclassification;
- declaration of dividend;
- voluntary amalgamation;
- RTGS membership;
- appointment/reappointment of MD & CEO/Principal Executive;
- remuneration of Whole-Time Directors;
- appointment of CRO and CCO; and
- undertaking certain regulated businesses.
The framework also retains Board review or reporting requirements in areas such as:
- customer service;
- major shareholder fit and proper status;
- information security governance;
- operational resilience;
- shareholding monitoring;
- encumbrance of shares; and
- stress-test outcomes.
This indicates that the RBI has sought to rationalise Board involvement without compromising oversight of high-impact regulatory and risk matters.
7. Greater Role for Board Committees
One of the most important practical implications is the increased significance of Board Committees.
Appendix II-B specifically permits delegation, at the discretion of the Board, of matters such as:
- Risk-Based Internal Audit methodology and annual audit plan;
- operational manuals;
- special audit assignments;
- annual banking outlet expansion plans;
- correspondent banking relationships;
- service providers connected with directors or KMPs;
- LFAR review;
- investment portfolio matters;
- Business Correspondent model;
- banking outlet transactions;
- doorstep banking;
- material outsourcing;
- effectiveness of RBIA;
- cyber-security risk reviews;
- customer service matters; and
- several operational and compliance reviews.
This effectively elevates the importance of the Audit Committee, Risk Management Committee, Customer Service Committee and other appropriately constituted committees.
The delegation framework, however, requires a clear reporting architecture. Delegated authority should be accompanied by defined reporting frequency, escalation thresholds and exception reporting, so that the Board remains fully informed of material developments.
8. Implications for Board and Committee Processes
In my view, the amendment will require Payments Banks to undertake a comprehensive review of their existing Board and Committee governance framework before 1 October 2026.
The following areas should be reviewed:
A. Board Charter
The Board Charter should clearly specify:
- matters reserved exclusively for the Board;
- matters delegated to individual committees;
- matters delegated to management committees;
- matters requiring periodic reporting;
- matters requiring immediate escalation.
B. Committee Charters
The Terms of Reference of each Board Committee should be reviewed to ensure that delegated responsibilities are clearly documented and aligned with the RBI framework.
C. Delegation Matrix
A formal Board Delegation of Powers Matrix should be prepared, clearly identifying:
Matter → Regulatory Reference → Authority → Committee → Frequency of Reporting → Escalation Trigger.
D. Board Agenda
The Board agenda should be redesigned to distinguish clearly between:
- approval items;
- review items;
- information/reporting items; and
- matters dealt with under delegated authority.
E. Information Flow
Management should establish a structured reporting mechanism to ensure that the Board receives adequate, timely and decision-useful information. The RBI specifically expects the Board to determine the nature and frequency of information required from management and permits the Board to seek external reports where necessary.
9. Specific Action Points for the Company Secretary
From a Company Secretarial and Board Governance perspective, the following actions would be advisable:
- Prepare a detailed comparative matrix of the existing Board agenda requirements against the new Appendix I, Appendix II-A and Appendix II-B framework.
- Identify all matters currently placed before the Board which may, from 1 October 2026, be delegated to Board Committees or Management Committees.
- Review the Articles of Association and Board-approved delegation framework to ensure that the proposed delegation is legally and procedurally permissible.
- Review the Terms of Reference of all Board Committees, particularly the Audit Committee, Risk Management Committee, Customer Service Committee and IT/Cyber-related committees.
-
Prepare a revised Board Agenda Matrix categorising each item as:
- Board approval;
- Board review;
- Board information/reporting;
- Committee approval;
- Committee review; or
- Management Committee/management-level matter.
- Review the frequency of Board meetings and committee meetings to ensure that delegation does not result in fragmented or inadequate oversight.
- Establish an escalation mechanism whereby significant exceptions, breaches, emerging risks and adverse trends are automatically brought to the Board.
- Review Board reporting formats to ensure that delegated matters are reported to the Board in a meaningful and consolidated manner.
- Update Board and Committee calendars with effect from 1 October 2026.
- Place the revised governance and delegation framework before the Board for approval before the effective date.
10. Overall Assessment
The Amendment Directions should be viewed as a governance rationalisation exercise rather than a relaxation of regulatory oversight.
The RBI is essentially moving away from a model in which the Board's time is consumed by an extensive list of recurring regulatory agenda items, towards a model where the Board exercises strategic oversight, risk governance and accountability, while allowing appropriately constituted committees to handle matters that can be effectively delegated.
The key message for Payments Banks is therefore "delegation with accountability." The Board may delegate authority, but it cannot delegate away its ultimate responsibility for the bank's strategy, financial soundness, governance, risk management and compliance. The Board is also expected to periodically reassess whether the delegation framework remains appropriate and whether the information reaching it is timely and adequate.
Conclusion
The Amendment Directions are likely to have a material impact on Board governance architecture, committee functioning and Board agenda management of Payments Banks. The immediate priority should be to undertake a governance gap analysis and create a revised Board–Committee–Management responsibility matrix before the provisions become effective on 1 October 2026.
The amendment presents an opportunity for Payments Banks to make Board meetings less compliance-heavy and more strategically focused, but its success will depend upon the quality of delegation, the robustness of committee oversight, the adequacy of management reporting and the effectiveness of escalation mechanisms. The objective should not merely be to reduce the number of items on the Board agenda, but to ensure that the right matters reach the right governance forum at the right time.
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