The Reserve Bank of India (RBI) has concluded a sweeping consolidation of its regulatory framework, merging 9,445 circulars into just 244 master directives, organized function-wise across 11 categories of regulated financial entities. The central bank described the exercise as an effort to enhance clarity and remove layers of overlapping guidance that had accumulated over eight decades — a regulatory archive dating back to 1944.
Deputy Governor S.C. Murmu, addressing the media in Mumbai on Friday, said the move is expected to significantly improve accessibility and lower compliance burdens for entities ranging from commercial banks to non-banking financial companies. Of the circulars reviewed, 3,809 were incorporated into the new master directives, while 5,673 were declared obsolete and repealed.
The oldest circular to be discarded was on “Advances against government securities,” issued on April 24, 1944, offering a glimpse into how deeply layered RBI’s regulatory legacy had become.
Inside the Consolidation: A Human-Centric Effort
Murmu emphasized that the consolidation was not driven by artificial intelligence — a notable clarification at a time when regulatory bodies worldwide are adopting AI-assisted tools. Instead, the RBI relied on a team of 37 officials, with contributions from every department, to manually assess, categorize, and integrate decades of regulatory instructions.
The exercise began in June under the direction of Governor Sanjay Malhotra, who had prioritized stronger regulatory hygiene to reduce institutional ambiguity.
“This was done to simplify compliance for both regulated entities and the regulator,” Murmu said, noting that human oversight was crucial to ensuring that the functional context of each circular was understood and correctly placed in the new master framework.
This manual review, officials noted, allowed RBI to flag circulars that had been superseded by later reforms but never formally withdrawn — a common source of confusion among banks and auditors.
Why the Overhaul Matters: Clarity for a Complex Financial Landscape
For India’s financial institutions, the consolidation marks a significant shift toward a more predictable and navigable regulatory environment. Over time, institutions have grappled with circulars that were disparate, occasionally contradictory, and dispersed across multiple archives.
By reorganizing these into 244 function-wise master directives, RBI aims to reduce compliance challenges and lower the risk of inadvertent breaches caused by outdated or conflicting instructions.
Murmu said the overhaul will “improve compliance by eliminating the risk of missing regulatory requirements,” an acknowledgment that even large institutions have struggled to keep up with the sheer volume of instructions.
Industry analysts say the consolidation may also ease the burden on smaller banks and cooperative institutions that lack dedicated compliance teams, making it easier to interpret and implement RBI’s guidelines without relying excessively on external consultants.
Who Is Covered: A System-Wide Reset
The new master directives apply to 11 categories of regulated entities, encompassing nearly the entire spectrum of India’s banking and financial system:
- Commercial Banks
- Small Finance Banks
- Payments Banks
- Local Area Banks
- Regional Rural Banks
- Urban Co-operative Banks
- Rural Co-operative Banks
- All India Financial Institutions
- Non-Banking Financial Companies (NBFCs)
- Asset Reconstruction Companies
- Credit Information Companies
Together, these institutions serve hundreds of millions of customers and manage assets running into trillions of rupees. Bringing consistency to their regulatory obligations, officials said, is critical to ensuring smoother supervision and better risk management.
Analysts note that the consolidation aligns with RBI’s ongoing efforts to modernize India’s regulatory architecture in step with rapid changes in digital payments, credit expansion, and fintech integration.
