The Reserve Bank of India (RBI) on November 28, 2025 issued the Reserve Bank of India (Small Finance Banks – Undertaking of Financial Services) Directions, 2025, establishing a comprehensive regulatory framework governing the range of financial services that Small Finance Banks (SFBs) may undertake. These Directions outline permissible business forms, prudential norms for investments, and approval procedures, while also prescribing rules for activities such as equipment leasing, hire purchase, factoring, underwriting, agency services, referral arrangements, retailing of government securities, and membership in SEBI-approved stock exchanges.
The Directions define key terms, specify board responsibilities in policy formulation and risk governance, and set conditions for financial service activities to ensure prudent operations, customer protection, and systemic stability. Provisions relating to certain investment-related prudential regulations (paras 23–29) come into effect from January 1, 2026, unless adopted earlier by the SFB based on internal policy.
[Notification No. RBI/DOR/2025-26/179]
