Setting the agenda: RBI directs bank boards to sharpen strategic focus

The revised framework, effective October 1, 2026, requires bank boards to define reserved matters, review delegated powers and devote greater attention to strategy and risk governance

The Reserve Bank of India (RBI) on Tuesday issued amended directions to rationalise the matters placed before bank boards, with the aim of enabling more effective use of board time and fostering deeper, focused engagement on strategy and risk governance.

 

The amended directions also require boards to explicitly define the matters reserved for their approval and to periodically review delegated powers. The revised framework will take effect from October 1, 2026.

 

Under the amended norms, boards will exercise oversight over risk management, policy and strategy, exposures to related entities, and compliance with corporate governance standards, among other responsibilities. “The chairperson of the board shall have the primary responsibility for setting the agenda of the meeting,” the RBI said.

   

The regulator said boards would continue to bear ultimate responsibility for the bank’s business strategy, financial soundness, governance framework, key personnel decisions, risk management and regulatory compliance.

 

The directions also require boards to ensure they receive sufficient and timely information from management to discharge their responsibilities effectively. Boards must specify the nature and frequency of information to be provided by management. “The board may seek external reports, if needed,” the RBI diktat added.

 

Boards may delegate specified matters to board committees or management committees, subject to clearly defined reporting requirements. They have also been asked to clearly articulate the matters reserved for their approval and ensure that sufficient time is devoted to deliberations on strategy and risk governance.

 

“The board shall periodically review the matters to be placed before it as well as the matters delegated to the board/management committees,” the RBI said. The review should also assess the timeliness of agenda circulation, the adequacy of information accompanying agenda papers, and the time allocated to important matters. 

 

Boards have further been directed to specify the nature and frequency of information they require from management and to periodically review whether delegated matters, agenda quality, circulation timelines and time allocated to key issues remain appropriate.

 

The revised framework also extends governance provisions currently applicable to public sector banks (PSBs) to private sector banks (PVBs), with suitable modifications. The responsibilities of boards and the revised governance practices prescribed under the directions will apply to private lenders on a mutatis mutandis basis.

 

The framework retains board approval requirements for key policies, including credit, investment, risk management, outsourcing, digital banking, information technology, responsible business conduct, deposits, compensation, KYC and disclosures, as well as important frameworks such as fit and proper (F&P) assessments for major shareholders, corporate social responsibility (CSR), and the protected disclosure scheme. At the same time, it permits the delegation of specified aspects to board committees where considered appropriate.

 

Similarly, matters including capital planning, dividend declarations, voluntary amalgamations, and the appointment of the managing director and chief executive officer, chief risk officer and chief compliance officer will continue to require board approval. 

Setting the agenda 

• Strategy first: Boards to focus on strategy and risk, not routine matters
• Chair sets agenda: Board chairperson to lead meeting agenda
• Better oversight: Boards to seek timely, adequate management information
• Common governance: Governance provisions applicable to PSBs extended to private banks