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Governance Matters
February 19, 2026
LODR Obligations Stand Independent of RBI Governance Norms: SEBI’s PNB Guidance
SEBI clarified that compliance obligations under the LODR Regulations operate independently and cannot be substituted by governance mechanisms permitted under sectoral regulations. This guidance from SEBI highlights that listed entities operating in multi-regulator sectors to independently meet SEBI’s corporate governance norms in addition to sector-specific requirements, as adherence to one framework does not absolve obligations under the other.
Introduction
In a recent informal guidance issued to Punjab National Bank (“PNB”) dated February 6, 20261, Securities and Exchange Board of India (“SEBI”) examined the interaction between the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”)2 and sector-specific governance norms prescribed by the Reserve Bank of India (“RBI”). The guidance was issued under the SEBI (Informal Guidance) Scheme, 2025, in response to a query raised by PNB concerning the appropriate governance forum for reviewing the Quarterly Integrated Governance Report (“QIGP”) required under Regulation 27 of the LODR Regulations.
The matter arises in the broader context of India’s multi-regulatory framework, where listed entities in regulated sectors are often subject to overlapping compliance expectations under securities law as well as sectoral governance directions. This article discusses the application filed by PNB, SEBI’s clarifications including the implications and takeaways from such clarifications for entities operating in multi-regulator compliance environments.
Application by PNB
The matter originated from an application filed by PNB on January 2, 20263, seeking interpretative guidance from SEBI under the Informal Guidance Scheme, 2025. PNB sought clarity on the governance framework applicable to QIGP required to be filed as part of its corporate governance disclosures under Regulation 27(2)(a) of the LODR Regulations read with the SEBI’s Circular for implementation of recommendations of the Expert Committee for facilitating ease of doing business for listed entities dated December 31, 2024 (“SEBI Circular”)4.
Regulation 27(2)(a) of the LODR Regulations states that a listed entity shall submit, to the recognized stock exchange(s), a quarterly compliance report on corporate governance, i.e QIGP, in the format and within the timelines, as may be specified by the Board from time to time. Further, the SEBI Circular mandates that the QIGP should be placed before the board of directors. The listed entity needs to also affirm that the report has been reviewed by the board of directors and any observations, comments, or advice provided by the board of directors may be mentioned therein.
PNB’s query arose in the context of the RBI (Commercial Banks – Governance) Directions, 2025 (“RBI Directions”)5. Clause B(18)(v) of Chapter II of the said directions permit a public sector bank (“PSB”) to delegate to committees of the board, inter alia, the duty to “ensure compliance with the statutory / regulatory framework”, enabling the board to concentrate on strategic issues.
Notably, the scope of compliance with the statutory / regulatory framework has not been clearly defined, and the broad wording could arguably extend to review of the QIGP by a board committee. PNB accordingly sought clarification on whether oversight of the QIGP could be delegated to its audit committee or another board committee. The issue raised was structural, namely whether compliance mechanisms prescribed by sectoral regulators could substitute specific disclosure and governance obligations mandated under securities market regulations, i.e., the LODR Regulations.
SEBI’s Informal Guidance
SEBI provided a clear and categorical interpretation of the regulatory framework, relying on the aforesaid compliance requirements under the LODR Regulations read with the SEBI Circular. While SEBI acknowledged that the RBI Directions permit monitoring of compliance with the statutory / regulatory framework through board committees, it unequivocally clarified that such monitoring cannot be treated as compliance with the requirements prescribed under the LODR Regulations, and that the said regulations are not in contradiction with the RBI Directions.
SEBI emphasized that placing the QIGP before the board of directors is a mandatory requirement applicable uniformly to all listed entities, including PSBs listed on stock exchanges. It was opined that the committee-level review permitted under the RBI Directions is different from the requirement under the LODR Regulations, which are essentially disclosure and governance obligations. Through this guidance, SEBI reaffirmed that compliance with the LODR Regulations constitutes an independent and mandatory layer of governance oversight for listed entities.
Key Takeaways
The conflict between sectoral regulators6 and cross-sector regulators7 is not unique to the banking sector but reflects a structural characteristic of India’s multi-regulator model.
SEBI’s guidance to PNB carries broader implications beyond corporate governance reporting. It reinforces that the LODR Regulations prescribe minimum governance and disclosure standards applicable uniformly to all listed entities, irrespective of sectoral regulation, and that sector-specific governance frameworks cannot substitute compliance with securities market obligations. By mandating direct board-level review of governance disclosures, SEBI underscores the importance of board accountability and active oversight in corporate governance matters, rather than reliance solely on specialized committees.
The clarification also promotes regulatory uniformity across sectors and serves as a key takeaway for entities operating in dual-regulated environments such as banking, insurance, pension funds, non-banking financial companies etc. Acquirers, investors, and transaction advisors should therefore undertake comprehensive regulatory diligence, as compliance with one regime will not be deemed sufficient. From the perspective of transactions involving listed entities operating in such dual-regulated sectors, diligence exercises will need to specifically assess whether the target’s governance reporting and board processes meet the independent requirements under the LODR Regulations, in addition to sectoral governance directions issued by regulators such as the RBI, IRDAI, or PFRDA.
Ultimately, this guidance strengthens India’s evolving jurisprudence on regulatory overlap and reinforces the need for listed entities to adopt a holistic compliance approach, ensuring that both sectoral norms and securities market governance requirements are satisfied simultaneously. In doing so, it underscores the centrality of corporate governance in securities regulation, ensuring that both sectoral norms and broader market-based governance standards including transparency, board accountability, and investor protection are satisfied simultaneously.
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