MUMBAI: In a major push to promote the ease of doing business by bringing down the cost of compliance, the Reserve Bank has consolidated as many as 9,446 circulars/directions into 244 master directions across 11 types of regulated entities.
Going forward, new/amended regulatory norms will be known as directions and not circulars, deputy governor in charge of the regulatory department Shirish Chandra Murmu told reporters here Friday.
The central bank till now used to issue circulars and master circulars as well as directions and master directions.
The initial announcement of repealing most of the directions, which date back to the 1940s, was made on October 1 by governor Sanjay Malhotra and on October 10, the RBI issued the draft for repeal/consolidation.
"Today we will be issuing 244 consolidated master directions. These consolidate all regulations issued to entities over several decades since the 1940s," Murmu said, adding the oldest circular repealed was issued on April 22, 1944 on ‘Advance against government securities’.
Murmu said these changes will definitely bring down the cost of compliance for all regulated entities but did not quantify by how much.
A 40-member team from the department of regulations has been working on it since late June, the central bank said.
The move, aimed at making regulations more timely and user-friendly, has seen 5,673 circulars getting repealed/annulled for being obsolete, and 3,809 getting consolidated/subsumed into 244 master directions.
The original plan was to have only 238 master directions but the numbers added up to 244 after including those dealing with digital payments players, Murmu said.
The changes are expected to significantly improve the accessibility of regulatory instructions for all regulated entities, thereby reducing the cost of compliance. The consolidation of regulatory instructions separately for each type of regulated entity will improve the clarity on applicability of each instruction to a regulated entity, the RBI said.
The central bank also consolidated regulated entities into 11 types—commercial banks, which will now be regulated by 32 master directions, small finance banks, payments banks, local area banks, regional rural banks, urban cooperative banks, rural cooperative banks, all-India financial institutions, non-banking finance companies, asset reconstruction companies and credit information companies.
All circulars applicable to commercial banks have been covered under 32 master directions. Banks will need to only follow directions listed under the master directions.
"As far as the department of regulation is concerned, this is a one-time exercise. From here on, we will add to what has been built as a foundation," Murmu said, adding on bank licensing, the guidelines across various entities have been consolidated as well.
He further said in any situation where the regulations require any changes or updation, those will also be put within these master directions.
The changes are part of the central bank’s comprehensive exercise of consolidating the regulatory instructions currently administered by the department of regulation, on an “as is” basis.
“This exercise is expected to significantly improve the accessibility of regulatory instructions for the regulated entities, thereby reducing their compliance cost. Also, consolidation of regulatory instructions separately for each type of regulated entities would improve the clarity on applicability of each instruction to a regulated entity,” the RBI said.
The present exercise of consolidation carries forward the work carried out by the Regulations Review Authority, set up for reviewing the regulations, circulars and reporting systems, based on feedback from the public, banks and financial institutions. The authority recommended the withdrawal of 714 circulars and discontinuation/merger/conversion to online submission.
The Reserve Bank had received over 770 comments from various stakeholders on the draft master directions. Several suggestions were for regulatory changes, which were outside the scope of this consolidation exercise, and hence have not been considered for the purpose of consolidation. The remaining comments, relevant to the finalisation of the master directions have been duly considered while finalising the consolidated master directions.