The Reserve Bank of India (RBI) on July 31, 2026, issued the Reserve Bank of India (Urban Co-operative Banks - Compliance Function) Directions, 2026.
These Directions shall come into effect on July 31, 2026.
The following has been stated:
• The Directions establish a comprehensive framework to strengthen the compliance function and corporate governance in Urban Co-operative Banks (UCBs). The Directions apply to all UCBs, with enhanced compliance requirements for Tier 3 and Tier 4 UCBs, and provide a six-month transition period for eligible banks coming out of All Inclusive Directions.
• They require every UCB to adopt a Board-approved Compliance Policy, with oversight by the Board/Audit Committee and senior management, covering compliance culture, risk assessment, monitoring, reporting, and approval of new products.
• The Directions also provide for an independent Compliance Department headed by a Chief Compliance Officer (CCO), prescribe the eligibility, appointment, tenure, independence, reporting structure, and responsibilities of the CCO, and require periodic compliance risk assessments, monitoring of regulatory compliance, staff accountability for compliance failures, internal audit of the compliance function, and the use of technology-based compliance monitoring systems.
• They further prescribe the role of Compliance Officers for specified UCBs, repeal the earlier compliance framework, and preserve actions taken under the previous directions.
[Notification No. – RBI/DoS/2026-27/435 DoS.CO.PPG.29/11.01.005/2026-27]
