SEBI: Listing Rules on Corporate Governance to Prevail Over RBI

• 09 Feb 2026
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The Securities and Exchange Board of India (SEBI), the market regulator, has made it clear that listed entities, including public sector banks, are required to place their quarterly corporate governance compliance reports before the full Board of Directors. The market regulator has further clarified that this responsibility cannot be delegated to any board committee, such as the Audit Committee.

The clarification by SEBI came through an information guidance that was issued to the Punjab National Bank, which had sought the interpretive view of the market regulator on compliance with Regulation 27 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

It was argued by the Bank that the Reserve Bank of India’s Commercial Banks – Governance Directions, 2025 permit public sector banks to delegate certain responsibilities, including compliance with statutory and regulatory requirements, to board committees. This delegation allows the board to give more focus to strategic issues.

Given this regulatory framework, PNB sought the opinion of SEBI on whether the oversight of the Quarterly Integrated Governance Report could be assigned to the audit committee or a similar committee within the board. However, SEBI stated that the requirements under the LODR Regulations and its circular dated 31 December 2024 aimed at facilitation of ease of doing business for listed entities, differ from the RBI’s governance framework and are not diminished by it. 

In its informal guidance letter, SEBI indicated that "the monitoring of compliance requirements by a committee of the Board of Directors in terms of the RBI Directions cannot be regarded as compliance” with the provisions of the LODR Regulations and SEBI circulars.

It was further informed by PNB to SEBI that it had sought clarification from the National Stock Exchange. However, the stock exchange provided a negative response regarding such delegation. SEBI has clarified that the informal guidance provided was based on the specific facts as presented by the bank and does not constitute a binding decision by the SEBI Board. Also, it noted that different set of facts could result in a different regulatory outcome. 

This informal guidance is expected to offer clarity to other listed public sector banks and regulated entities as they navigate the overlapping governance requirements under the frameworks of SEBI and RBI especially concerning board level accountability for corporate governance disclosures. 

Under the informal guidance framework by market watchdog, regulated entities can seek SEBI’s perspective on regulatory issues upon payment of a fee. This process helps entities avoid regulatory violations before making decisions and offers greater clarity regarding regulations. 

SEBI has quite recently established a nodal cell for informal guidance. Previously, such queries were handled by the respective departments but now they are facilitated through this dedicated cell.

Source: Money Control