The Reserve Bank of India (RBI) will consolidate more than 8,000 regulations to simplify the country’s banking compliance framework, said Governor Sanjay Malhotra on Thursday at the Financial Express Modern BFSI Summit. The ongoing exercise aims to enhance regulatory clarity for banks, non-banking finance companies (NBFCs), and other regulated entities while removing outdated rules.
Of the 8,000 regulations currently in force, approximately 5,000 have been identified as obsolete or redundant. The remaining 3,000 will be reorganised under a streamlined structure. “This is not new regulation-making,” Malhotra clarified. “We are consolidating existing regulations, circulars, and master directions to bring them under one unified framework.”
The RBI plans to introduce one master circular each for banks and NBFCs. The central bank is also categorising regulations under 33 thematic subjects to align compliance systems and reduce confusion caused by overlapping mandates.
Regulatory Review Cell and Master Circulars Planned
Governor Malhotra highlighted the operational burden faced by financial institutions. “Banks are required to maintain nearly 100 board-approved policies. This diverts the board’s focus from strategic decision-making to administrative management,” he said.
To ease this pressure, the RBI is seeking ways to rationalise internal policies and reduce complexity in regulatory compliance. Measures already initiated include reducing the number of regulatory returns submitted by supervised entities.
The central bank is also setting up a dedicated regulatory review cell that will conduct a five-to-seven-year audit of all regulations. “We want to assess whether a rule is still relevant, whether it achieves its cost-benefit purpose, and if any regulatory gaps exist,” Malhotra said.
The RBI has also formalised a regulation-making framework that mandates consultation and impact analysis before issuing new directives. “This framework ensures that we understand the compliance burden and financial impact before a rule is brought into force,” he added.
The overhaul aims to balance efficiency with financial stability and consumer protection in a rapidly evolving financial ecosystem.