The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks - Governance) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Governance) Directions, 2025, prescribe governance, board composition, and fit-and-proper criteria for directors of local area banks, including tenure, age, and independence norms.
•They define roles and responsibilities of MD&CEO, WTDs, and NEDs, emphasizing risk management, accountability, and adherence to regulatory policies.
•The Directions set detailed guidelines for compensation, deferral, malus/clawback, and disclosure for executives and material risk takers, aligned with Basel and FSB standards.
•Banks are required to obtain RBI approval for appointments and remuneration of MD&CEO, WTDs, and Chairpersons through the Pravaah Portal.
· These Directions shall come into force with immediate effect.
[Notification No.: RBI/DOR/2025-26/225 DoR.HGG.GOV.No.144/29.67.001/2025-26]
