RBI Initiatives to Reduce Compliance Burden

Why in News

On November 28, 2025, the Reserve Bank of India (RBI) took a significant step by issuing 244 "Consolidated Master Directions." The aim is to reduce the compliance burden on regulated entities (REs) and bring transparency and clarity to the regulatory framework.

About RBI's Regulation Initiatives

Background

• RBI has issued over 9,000 circulars/guidelines over the past few years.
• Due to the various directions issued at different times, REs such as banks, NBFCs, and financial companies had difficulty understanding which direction was applicable and which was not.
• In 2025, RBI issued a new framework to make the regulatory process more consultative and transparent.
• This consolidation is considered a major and historic step in this direction.

Key Points

• 244 new key directives were issued, consolidating 3,500 old directives.
• Separate directives have been formulated for the following 11 types of REs:

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. NBFCs
10. Asset Reconstruction Companies
11. Credit Information Companies

Challenges

• Removing old directives and implementing new ones on a large scale is a complex process.
• Some stakeholders made suggestions related to regulatory changes, but these were not covered by this process and could not be incorporated.
• It may take time for all REs to understand the new MDs and update their internal compliance systems. 
• Large-scale changes may lead to initial confusion or technical challenges.

Way Forward

• The RBI continues to emphasize a consultation-based regulatory process.
• Financial institutions will need training and internal process upgrades to understand and implement the new Master Directions.
• The clarity and uniformity of the new directions will facilitate regulation enforcement and improve ease of doing business.
• The RBI may review and make necessary amendments from time to time.

Conclusion

This move by the RBI is a major achievement towards enhancing clarity, transparency, and efficiency in the financial sector. The 244 consolidated Master Directions will not only reduce compliance burdens but also strengthen ease of doing business. This step will prove crucial in making the financial system more streamlined, modern, and consumer-friendly.