RBI repeals 5,673 circulars in consolidation exercise, creates 244 master directions

MUMBAI: The Reserve Bank on Friday announced the culmination of a nearly six-month-long exercise to consolidate regulations, resulting in the repeal of 5,673 obsolete circulars.

Over 3,800 relevant circulars have been classified under broader themes and subsumed into 244 function-wise master directions, in which an entity must refer to the applicable MD for compliance with regulatory requirements.

In all, 9,446 circulars have been subsumed, repealed or withdrawn as part of the exercise.

Deputy Governor S C Murmu termed this a mammoth exercise in which officers of the 1935-incorporated central bank reviewed every circular written over the decades, assessed its relevance in the present day, and classified them into the necessary categories in the MDs.

The oldest among the obsolete circulars dates back to a 1944 regulation on advances against government securities, he said.

The "fundamental reorganisation" of the regulatory architecture will reduce the cost of compliance for regulated entities by making the rules more accessible, and the RBI hopes that its guidelines are now followed in letter and spirit, Murmu said.

He said such an exercise had never been attempted in the central bank's history. "We were just writing circulars as needed; there were no sunset clauses on them," he said.

RBI Governor Sanjay Malhotra's focus on ease of compliance for regulated entities led to the exercise, Murmu said, adding that the staff was given a stiff deadline.

It can be noted that the government is also putting up efforts to repeal obsolete laws or make them more contemporary, and the capital markets regulator SEBI has also been on a similar initiative.

The RBI first released a draft with 238 MDs in October and released the final set of 244 MDs on Friday. There have been seven new MDs in digital banking, who have also been included in this set.

Murmu said that henceforth, all new guidelines will either be added to an MD as an amendment or new MDs themselves will be added.

Like in the old system, the additions will be colour-coded for the stakeholders.

There are 11 types of regulatory entities, including commercial banks, small finance banks, etc, and they have a relevant portion for themselves in the MDs, Murmu said, adding that commercial banks will have to see 32 MDs.

Murmu noted that a few circulars found relevant but not fitting into any MD have been retained even under the new system, dominated by 244 MDs.

There have been no substantial changes to the regulations, and much of the exercise focused on consolidation and deletion, he said.