To streamline the regulatory architecture and enhance the Ease of Doing Business for financial institutions, the Reserve Bank of India (RBI) has issued 244 consolidated Master Directions (MDs).
Core Reform :
- Consolidation: The RBI has reviewed approximately 3,500 existing directions and circulars issued over decades.
- Repeal: As a result, 9,446 circulars have been repealed or withdrawn.
- New Structure: These have been replaced by 244 consolidated Master Directions, which serve as the single point of reference for regulations.
- Objective: To reduce the compliance burden on Regulated Entities (REs) and remove ambiguity caused by scattered circulars.
2. 11 Regulated Entities :
The new directions cover 11 specific types of Regulated Entities (REs).
- Commercial Banks (Public & Private)
- Small Finance Banks (SFBs)
- Payments Banks
- Local Area Banks (LABs)
- Regional Rural Banks (RRBs)
- Urban Cooperative Banks (UCBs)
- Rural Cooperative Banks
- All India Financial Institutions (AIFIs) (e.g., NABARD, SIDBI, EXIM Bank, NHB)
- Non-Banking Financial Companies (NBFCs)
- Asset Reconstruction Companies (ARCs)
- Credit Information Companies (CICs)
3. Key Structural Changes in Regulations
- Entity-Specific: Instructions are now organized specifically for each type of RE (e.g., a separate Master Direction for NBFCs vs. Commercial Banks).
- Continuous Flow Approach: Major instructions are included in the main body, avoiding fragmented annexures.
- Board Responsibilities: Instructions pertaining to the Board of Directors have been segregated and placed in a single distinct section within each Master Direction to ensure accountability.
Advisory Distinction: The language clearly distinguishes between mandatory instructions and advisory/guidance elements.
