Brief Overview:
Accountability for outcomes (achieved and prevented), not mere tick-the-box processes? That may well sum up the new regulatory expectations of the board of directors of private sector banks and nationalised (Government-owned) banks (“Bank Boards”).
Towards that end, the regulator has simultaneously reduced the procedural overload on and rationalised matters requiring the consideration of Bank Boards.
The new framework expects and seeks to enable Bank Boards to focus on what truly matters, i.e., Risk Oversight, Strategy, and Accountability (“ROSA”). The message is clear: technology may inform (or even be making the) decisions, and still responsibility remains with the Board.
All this and more is what we are gleaning from the Reserve Bank of India’s (“RBI”) Commercial Banks – Governance (Amendment) Directions, 2026 (“Amendment Directions”). In short, the regulator wants the boardroom shift gears from administration to leadership.
Technical Details:
1) Board agenda rationalisation: The RBI has streamlined governance requirements to reduce the number of matters mandatorily placed before the Board. The expectation is that Bank Boards will spend more energy and time on ROSA.
2) New framework for Board approvals and delegations: The RBI has classified matters requiring Bank Boards approval, review or information, and those that may be delegated, across the following appendices:
(a) Appendix I – policy matters requiring Bank Boards’ approval, as well as policy matters that may be delegated by Bank Boards to a Board committee;
(b) Appendix IIA – matters (other than policy-related) requiring Bank Boards’ approval, or review (which cannot be delegated to a Board committee); and
(c) Appendix IIB – matters (other than policy-related) that may, at the Board’s discretion be delegated to specified Board Committees for approval, review or reporting purposes.
3) Bank Boards are now required to periodically assess the matters to be placed before them as well as the matters that are delegated to committees of Bank Boards and those to management committees.
4) The Amendment Directions shall be effective from 1st October 2026 onwards.
5) Implications on data governance in the age of artificial intelligence:
The regulator has already released draft norms as to data governance; ‘Guidance on Regulatory Expectations for Data Governance’. That seeks to elevate data governance from an information technology function to a board-level risk and compliance priority. Entities regulated by RBI are expected to establish a board-level ‘Data Governance Committee’ (or even designate an existing committee as such). This committee is to be empowered to oversee data quality, security and compliance, review key governance metrics, and monitor material data risks, breaches, remediation efforts, etc.
JC Takeaways:
The Amendment Directions signal a shift in the RBI’s expectation from Bank Boards. From merely providing administrative approvals, etc., to actively overseeing business strategy, financial soundness, risk management, governance matters, etc. When read together with the Draft Data Guidelines, it shows that the regulator is more than cognisant of banking is now largely data driven and getting to becoming AI-driven. It expects Bank Boards to recalibrate their oversight of data and technology frameworks, recognising that accountability for related risks and outcomes ultimately remains with them.
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For any queries/clarifications, please feel free to ping us and we will be happy to chat:
- Jayesh H (jayesh.h@juriscorp.in)
- Pranav Rattan (pranav.rattan@juriscorp.in)
- Vaishnavi Panyam (vaishnavi.panyam@juriscorp.in
