RBI sets up new panel to update, streamline financial regulations

Mumbai: The new Regulatory Review Cell (RRC) set up within the Reserve Bank of India’s department of regulation will give a structure to regulatory changes, help quicken the review process and allow financial institutions to flag redundant rules and give feedback on dated regulations, bankers and analysts said.

A permanent review mechanism for old regulations will institutionalise regulatory agility, they said.

The RRC set up last week as part of the department of regulations will ensure central bank rules are reviewed every five to seven years. More importantly, the RBI has also formed an independent advisory group on regulation under the chairmanship of State Bank of India managing director Rana Ashutosh Kumar Singh and five other financial sector executives to channel industry feedback on regulations to the RRC.

Until now, regulations were largely updated through circulars. The RRC will ensure that they are reviewed more thoroughly and systematically.

“Importantly, it will go beyond piecemeal updates to examine the master directions themselves, aligning both the language and the content with evolving market and policy dynamics,” said Pratik Shah, head of financial services at EY. “This structured approach will make the regulatory framework more contemporary, consistent and responsive to the needs of the financial sector.”

Industry experts will help RBI gauge market sentiment and open a formal window for people to sound off the central bank, bankers said.”Even if a regulation is conflicted or redundant, there was little recourse to banks because the DoR does not take a view on suggestions unless it comes from the top. With this advisory group, at least banks have someone to reach out to and seek changes,” said a senior private sector banking executive.Besides the SBI MD, the members of the advisory group are former Sundaram Finance MD TT Srinivasaraghavan, Saraswat Bank chairman Gautam Thakur, former Jana Small Finance Bank chief compliance officer Ravi Duvvuru, former Federal Bank CEO Shyam Srinivasan and former ICICI Prudential Life Insurance CEO NS Kannan. The group will have the provision to co-opt additional experts and will have an initial tenure of three years, renewable by a further period of two years, the RBI said.

Kuntal Sur, partner, financial services and treasury at PwC, said the RBI move is welcome because despite upgrades to rules, some of the regulations are too old to even exist. “Key regulations like asset liability management, credit limits and risk assessment were made in the 90s which is a long way ago,” Sur said.