The Reserve Bank of India (RBI) on July 30, 2026, issued the Reserve Bank of India (Small Finance Banks – Governance) Third Amendment Directions, 2026.
The following amendments have been stated:
4(1) For Paragraph 55(3)(ii)(f), the following shall be substituted, namely:
“Share-linked Instruments: Such instruments shall be included as a component of variable pay. Norms for grant of share-linked instruments shall be framed by a bank in conformity with relevant statutory provisions and should form part of the bank’s compensation policy. The details of share-linked instruments granted shall also be disclosed in terms of the disclosure requirements stipulated in the Reserve Bank of India (Small Finance Banks: Financial Statements - Presentation and Disclosures) Directions, 2025 Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025. Share-linked instruments shall be fair valued on the date of grant by the bank using Black-Scholes model. The fair value thus arrived at shall be recognised as an expense beginning with the accounting period for which approval has been granted.”
4(2) For Paragraph 55(7), the following shall be substituted, namely: “A bank shall make disclosure on remuneration of WTDs / MD&CEO / MRTs on an annual basis at the minimum, in their Annual Financial Statements as prescribed in Reserve Bank of India (Small Finance Banks: Financial Statements – Presentation and Disclosures) Directions, 2025 Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Directions, 2025, as amended from time to time.”
The above amendments shall come into force from April 1, 2027.
[Notification No. RBI/DOR/2026-27/212 DOR.ACC.REC.No.189/29.67.001/2026-27]
