The Reserve Bank of India's amended bank governance directions take effect October 1, 2026, enabling bank boards to facilitate more focused and qualitative engagement on strategy and risk governance. According to reports from Business Standard, the amendment brings key changes particularly regarding independent directors and board chair roles. The new rules reiterate that the chairperson of the board is the captain of the ship, with the board remaining a collective but the chairperson serving as the orchestra conductor. The amendment also mirrors the move to split the chairman-cum-managing director position in state-run banks, with no CMD position existing in these banks anymore.
RBI Deputy Governor Swaminathan J emphasized that independence is not a label but the ability to challenge strategy, controls, financials, and risk. As reported by Business Standard, the central bank's anonymous 2024 survey of bank boards revealed that many prefer consensus, with a meaningful minority hesitating to voice dissent. Vimal Bhandari, chairman of HDFC Mutual Fund Trustee Company and former independent director at RBL Bank, highlighted concerns about the approval process for loans when independent directors also serve on company boards, which gets escalated to full bank board approval. The RBI's scrutiny after IndusInd Bank's shortcomings in mid-2025 has focused on board meeting agendas, time spent on specific items, and observations by independent directors.
Hagens Berman, a national trial attorneys firm, has launched a securities fraud class action lawsuit against HDFC Bank Limited (NYSE: HDB) regarding alleged governance violations. According to Hagens Berman, the firm is investigating whether HDFC's senior leadership concealed a covert scheme to funnel millions in disguised payments to induce state-firm deposits while publicly painting a picture of strong governance and compliance. Reed Kathrein, the Hagens Berman partner leading the investigation, stated that the complaint alleges this covert scheme was designed to mislead investors about the bank's true financial position and governance practices. The lawsuit covers investors who purchased or acquired HDFC securities between July 17, 2023, and May 26, 2026, and suffered significant financial losses. If you purchased or acquired HDFC securities between July 17, 2023, and May 26, 2026, and suffered significant financial losses, you have until October 13, 2026, to ask the court to appoint you as lead plaintiff. To learn more about your legal options, submit your information to Hagens Berman at www.hbsslaw.com/hdb, call Reed Kathrein at 844-916-0895, or email [email protected](mailto:[email protected]).
The Bankers' Books Evidence Act, 2026 will become effective from October 1, 2026, modernizing the use of banking records as evidence in courts. According to the finance ministry statement, the Act received Presidential assent last month and will come into force from October 1, 2026, as notified on September 10. The Act adopts a technology-neutral approach by recognizing banking records maintained in physical, electronic, digital, virtual, cloud-based and other contemporary forms. It provides for simplified and standardized certification of banking records, including through manual, digital or electronic signatures. The Act also offers greater clarity on summoning bank officials where the bank is not a party to proceedings, requiring a 'special cause' to be recorded in writing by the court for such summoning. The Centre may extend provisions to specified financial sector entities or classes of entities, allowing the framework to cater to the evolving financial landscape.
Rohan Lakhaiyar from Grant Thornton Bharat argues that the challenge in attracting top-quality independent directors extends beyond remuneration, particularly since RBI recently increased the fixed remuneration ceiling to ₹30 lakh with additional sitting fees. According to Business Standard, the bigger concern is the risk-reward equation, as bank independent directors face heightened regulatory and reputational exposure while overseeing complex areas like credit, technology, and compliance. R Gurumurthy, serving on boards of Axis Capital and Religare Finvest, noted that boards spend significant time on regulatory compliance exercises, often performing executive tasks rather than governance functions.
Former RBI Governor Shaktikanta Das emphasized in May 2023 meetings that independent directors must be truly independent of both management and controlling shareholders, with loyalty to the bank only. As reported by Business Standard, he stressed the need for required alertness among all directors without advocating confrontation. Lakhaiyar called for greater clarity around individual accountability, pointing out that adverse outcomes trigger supervisory scrutiny but accountability depends on diligence exercised. He emphasized that governance culture is key for attracting top talent, requiring high-quality board information, independent professional advice access, and strong support for regulatory compliance tracking. These reforms reflect the government's continued commitment to modernising laws in line with technological advancements and evolving economic needs, promoting ease of doing business and strengthening a modern and efficient financial system.
