The Reserve Bank of India (RBI) on November 28, 2025, released the Reserve Bank of India (Small Finance Banks – Responsible Business Conduct) Directions, 2025 for public comments. These directions aim to consolidate and strengthen the regulatory framework governing customer service, fair business conduct, and consumer protection within Small Finance Banks (SFBs). They have been issued under Sections 21, 35A, 45ZC(3), and 45ZE(4) of the Banking Regulation Act, 1949, to promote responsible banking behaviour and enhance customer trust.
The outlines a comprehensive institutional framework requiring SFBs to adopt Board-approved policies on areas such as customer service, grievance redressal, fair lending practices, doorstep banking for senior citizens, and transparent service charges. It also mandates regular Board-level reviews on customer liability cases, compliance with fair practices codes, and the performance of grievance mechanisms. These measures are designed to ensure ethical banking operations and continuous improvement in service standards across the sector.
Further, the directions emphasize customer guidance and protection through enhanced transparency on loan pricing, mandatory disclosure of Annual Percentage Rates (APR), and clear display of service charges. They also prescribe strict mechanisms to limit customer liability in unauthorised electronic banking transactions by ensuring 24x7 reporting channels, robust fraud detection systems, and defined timelines for reporting such incidents. These consolidated guidelines mark a significant step toward fostering fair, inclusive, and secure banking practices among Small Finance Banks.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/201 DOR.MCS.REC.No.120/01-01-033/2025-26]
