Reserve Bank of India subsumes over 9K norms into 244 master directions

Move aims to ease compliance burden for regulated entities

The Reserve Bank of India (RBI) has consolidated the norms for the entities it regulates into 244 master directions with a view to making following the central bank’s instructions and guidelines easy — a move that will reduce the compliance burden for organisations in the financial sector. 

The exercise involved consolidating more than 9,000 existing circular/ guidelines issued by Department of Regulations into 244 function-wise master directions specific to each category of regulated entities. 

Nearly 9,500 circulars are being repealed or withdrawn. 

Instructions of the National Bank for Agricultural and Rural Development (Nabard) to regional rural banks, state cooperative banks, and central cooperative banks were also consolidated in consultation with Nabard. 

“It was a one-time exercise and a massive cleanup,” said RBI Deputy Governor S C Murmu while addressing the media. “Regulation per se has not been changed,” he added.  

There are 11 types of entities that are regulated by the RBI. They include commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban cooperative banks, rural cooperative banks, and non-banking financial companies.   

Murmu credited Governor Sanjay Malhotra with the job because he (Malhotra) was keen to do this within a tight deadline. The process started in June with a team of 37 officers formed to carry out the task. 

The oldest circular that was repealed had been issued on April 22, 1944. It was on advances against government securities. 

“While an increase in the number of regulatory guidelines is a natural process, as the financial system evolves, this increase was further driven by an expanding regulatory perimeter, distinguished supervisory and regulatory jurisdiction over certain regulated entities and non-repeal of some of the earlier instructions when new ones were issued,” Murmu said. 

“Being mindful of the compliance burden of the regulated entities, the RBI has continuously endeavoured to optimise its regulatory framework. Against this backdrop, it recently undertook a fundamental reorganisation of regulatory instruction administered by Department of Regulations, marking a paradigm shift in our regulatory communication,” he said. 

Following the exercise, Murmu said, banks can check the directions which are not applicable to them anymore. 

“This consolidation exercise is a milestone and is one more step in our commitment to stakeholders, which is expected to significantly improve the accessibility of regulatory instruction for the regulated entities and is a major step in achieving the objective of ease of doing business,” Murmu added.