The Reserve Bank of India (RBI) Governor, Shaktikanta Das, while presenting the April MPC decision emphasised that banks, NBFCs and other financial entities must continue to give the highest priority to quality of governance and adherence to regulatory guidelines.
Financial sector players, by and large, operate with public money – be it of depositors in banks and select NBFCs or investors in bonds and other financial instruments. They should always be mindful of this. The Reserve Bank will continue to constructively engage with financial entities in this regard, he said.
It needs to be recognised that financial stability is a joint responsibility of all stakeholders. Therefore, on its part, the Reserve Bank has been engaging with the regulated entities and various stakeholders for simplifying its regulations and reducing compliance burden.
As part of this endeavour, the recommendations of the Regulations Review Authority (RRA 2.0) constituted by the Reserve Bank have been largely implemented.
RRA 2.0 has set a new benchmark for meaningful engagement between the Regulator and the Regulated EntitiesRBI Governor said.
Moving further in the same direction, Internal Review Groups were formed in 2023 to rationalise, simplify and remove obsolete regulations and streamline reporting mechanism.
In pursuance of recommendations of RRA 2.0 and the Internal Review Groups, more than one thousand circulars have been withdrawn. A Master Direction for rationalising and harmonising supervisory returns has also been issued.
The Master Direction provides a broader framework to understand the purpose of filing supervisory returns and harmonises the timelines for their submission. It removes certain instructions that have become obsolete and consolidates twenty existing instructions, including one Master Direction for NBFCs.
It creates a single document for ensuring compliance related to submission of all supervisory data. A summary of all changes made are also included in the Master Direction for ease of reference.
“The Reserve Bank will continue to follow a consultative approach and undertake review of regulations in line with the evolving financial landscape,” he added.
The industry has also applauded RBI’s approach towards simplifying regulations.
Appreciating RBI’s initiative of regularly engaging with multiple stakeholders to reduce compliance burden, George Alexander Muthoot, MD, Muthoot Finance said that the implementation of recommendations of the Regulations Review Authority (RRA 2.0) is a testament of the RBI’s commitment.
We are in alignment with RBI’s view point that regulated entities should prioritise compliance and corporate governance and we believe this is paramount for ensuring sustainable growth for India while also safeguarding customers’ interests.Muthoot Finance MD said.
Addressing the media on Friday, the governor also pointed out that the key indicators of capital and asset quality of scheduled commercial banks (SCBs) continued to be healthy, and financial indicators of non-banking financial companies (NBFCs) are also in line with that of the banking system.
Amongst other major announcements, the RBI has decided to undertake a comprehensive review of the liquidity coverage ratio (LCR) framework for lenders in light of recent developments in overseas markets where patrons withdrew their banking deposits at a short notice due to the availability of instant digital payment modes.
