Mumbai- The Reserve Bank of India (RBI) has announced a major regulatory reform aimed at reducing compliance burdens and simplifying the country’s banking and financial framework. The central bank plans to repeal approximately 9,000 circulars and consolidate them into 238 Master Directions, providing a streamlined and accessible regulatory structure for all regulated entities.
This initiative covers all instructions issued by the RBI up to October 9, 2025, including Master Circulars and directives from erstwhile departments now merged into the Department of Regulation (DoR). The consolidation is designed to make regulatory compliance more straightforward, transparent, and efficient for financial institutions of all sizes.
Entities Covered by the Consolidation
The consolidation applies to 11 types of regulated entities, which include:
1. Commercial Banks
2. Small Finance Banks
3. Payments Banks
4. Local Area Banks
5. Regional Rural Banks
6. Urban Cooperative Banks
7. Rural Cooperative Banks
8. All-India Financial Institutions
9. Non-Banking Financial Companies (NBFCs)
10. Asset Reconstruction Companies
11. Credit Information Companies
According to RBI, the consolidation encompasses all regulatory instructions administered by the DoR, including directives issued by departments that have now been fully or partially merged into DoR. This ensures that all instructions related to each entity type are now available in a single, organized framework.
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Objective and Significance of the Consolidation
For instance, branch authorization guidelines for commercial banks will now be accessible in a single document. Similarly, prudential norms for capital adequacy and risk management applicable to small finance banks are consolidated in one place. All other regulations have been categorized according to subject and entity type.
“The consolidation aims to simplify the regulatory environment for financial institutions while enhancing clarity and transparency. This step is especially significant in an era of rapidly expanding digital and online financial transactions,” a senior RBI official said, requesting anonymity.
By organizing rules and guidelines into a cohesive framework, the RBI expects to reduce compliance costs, minimize confusion, and improve operational efficiency across the sector.
Public Consultation
The RBI has invited public comments on the draft consolidation by November 10, 2025. Industry stakeholders, banking professionals, and the general public are encouraged to provide feedback to further strengthen the framework. Authorities have emphasized that these suggestions will play a key role in refining the consolidation process.
Expert Perspective
Financial analysts and banking experts have welcomed the initiative, noting that it will significantly simplify regulatory adherence for both large and small financial entities. By centralizing multiple directives into 238 master documents, institutions can now navigate compliance more efficiently and with greater clarity.
Experts also caution that, despite simplification, banks and financial institutions must continue to strengthen internal controls and cybersecurity measures, particularly given the increasing volume of digital and mobile banking transactions.
Conclusion
The RBI’s consolidation exercise marks a landmark step in modernizing India’s regulatory architecture, promoting transparency, reducing administrative complexity, and aligning financial regulations with contemporary banking practices. The move is expected to enhance operational efficiency and provide a more user-friendly regulatory environment for all stakeholders across India’s financial ecosystem.
