RBI consolidating around 3K regulations into 33 thematic categories

Time of India

3 days ago

Mumbai: The Reserve Bank of India has launched a regulatory simplification initiative aimed at consolidating around 3,000 existing rules, circulars, and master directions into a streamlined, principle-based framework.
Governor Sanjay Malhotra clarified that the effort is not about creating new rules but rationalizing and combining existing ones to reduce compliance burden and enhance regulatory clarity.
'It's a consolidation of all the regulations, all the circulars, master directions,' Malhotra said. 'Our attempt will be to have one master direction, one circular for all the banks.' In the first phase, the RBI has grouped regulations into 33 thematic categories, with the long-term objective of issuing unified documents for banks, NBFCs, and other entities.
He was speakign at a fireside chat at an event in Mumbai.
The exercise follows RBI's assessment that years of regulatory layering had resulted in a fragmented framework, raising operational costs and complicating supervision. 'There are a number of board policies which have to be approved by the board. About 100 of them, a large number. It puts a lot of pressure on the board members,' Malhotra said. 'How can we rationalize them so that we can free up their space, their time in order to concentrate on strategic decisions?'
Malhotra said the initiative would 'provide simplicity and clarity for the regulated entities to understand and it will improve compliance.'
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RBI has already rationalized the number of regulatory returns entities must submit, and this broader consolidation marks an extension of that effort.
To ensure ongoing relevance of regulations, the RBI is setting up a dedicated regulatory review cell that will periodically reassess rules every five to seven years. 'The purpose over there will be to number one, see if there are any obsolete, redundant and they have lost their utility,' Malhotra said.
'Because it's a changing requirement, it's dynamic and evolving.'
The review will also examine whether rules maintain 'the right balance, the right trade off on cost and benefits,' and whether any regulatory gaps exist that could affect financial stability or consumer protection. 'Consumer centricity, which I mentioned, is a priority for us,' he said.
In parallel, the RBI has formalized its regulation-making framework around two pillars: consultation and impact analysis. 'We have highlighted, emphasized on two things. One consultation which I mentioned and the other is an impact analysis,' Malhotra said. 'What is the impact of the regulation from a cost perspective, from a benefit perspective, perspective on all the stakeholders.'
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