The Reserve Bank of India (RBI) on July 31, 2026, issued the Reserve Bank of India (Small Finance Banks - Compliance Function) Directions, 2026.
The following has been stated: -
•The Reserve Bank of India issued the Reserve Bank of India (Small Finance Banks - Compliance Function) Directions, 2026, to establish a robust governance framework and manage compliance risks across Small Finance Banks.
•These directions require banks to maintain an independent Compliance Department headed by a Chief Compliance Officer (CCO) with clear separation from internal audit functions.
•The Board of Directors and senior management bear overall responsibility for overseeing compliance policies, conducting quarterly and annual reviews, and ensuring prompt reporting of material breaches.
•Compliance teams are mandated to pre-assess new products and processes, continuously monitor regulatory updates, and ensure alignment across all business units.
•Additionally, the directions emphasize fostering a strong compliance culture through mandatory employee training, performance-linked compliance accountability, and proactive technology-based monitoring.
These Directions shall come into effect immediately upon issuance.
The detailed directions are given in the document below.
[Notification No.: RBI/DoS/2026-27/417 DoS.CO.PPG.11/11.01.005/2026-27]
