RBI Proposes Revised Norms To Free Up Banks' Board Time In Bid To Promote Ease Of Doing Biz

In a bid to promote ease of doing business, Reserve Bank Governor Sanjay Malhotra on Wednesday proposed to revise and rationalise guidelines to facilitate better utilisation of bank board’s time and draft directions in this regard would be released shortly.

The matters to be placed before the Boards of banks, along with their periodicity, are determined by the Boards themselves, guided by the seven broad themes prescribed by the Reserve Bank of India.

Meanwhile, the Reserve Bank has also mandated certain policies and matters to be placed before the Board for approval, review, or information.

"In an endeavor to enable Boards to utilize its time effectively, and to facilitate a more focused and qualitative engagement on strategy and risk governance, the Reserve Bank has undertaken comprehensive review and rationalisation of all such instructions. Draft directions in this regard will be issued shortly for public consultation," RBI said in its statement on Developmental and Regulatory Policies.

The announcement comes weeks after HDFC Bank Chairman Atanu Chakraborty’s abrupt resignation, citing ethical concerns.

"Certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal values and ethics. This is the basis of my aforementioned decision," Chakraborty had said in his resignation letter dated March 17.

This is the first time that the part-time chairman of HDFC Bank left mid-way raising concerns over its functioning.

Announcing the Monetary Policy Committee meeting outcome, Reserve Bank Governor Sanjay Malhotra said, "We had recently undertaken a detailed exercise, to consolidate over 9,000 regulatory instructions into 238 Master Directions. A similar consolidation exercise has now been completed for all our supervisory instructions." The Reserve Bank has constantly endeavored to refine and strengthen its regulatory and supervisory framework while minimising compliance costs, through periodic evaluation of instructions for their continued relevance.

In furtherance of this objective, the Reserve Bank had undertaken a comprehensive consolidation exercise of the regulatory instructions, on an ‘as is’ basis, in 2025. The exercise involved consolidation of more than 9,000 existing regulatory circular/guidelines into 238 function-wise Master Directions (MDs), specific to each category of regulated entity, the Statement on Developmental and Regulatory Policies said.

A similar exercise has now been carried out for the supervisory instructions, it said.

Accordingly, the drafts of 64 Master Directions consolidating extant supervisory instructions on up to nine functional areas are being published today on RBI website for public comments, it added.

To facilitate ease of doing business by MSMEs, Malhotra said, RBI proposed to dispense with the requirement of due diligence while onboarding them on TReDS platforms.

With a view to facilitating timely access to working capital for MSMEs, guidelines for Trade Receivables Discounting System (TReDS) were issued in 2014 and subsequently updated in 2018. The scope of TReDS was further expanded in 2023 with the inclusion of insurance companies as the fourth participant.

In order to promote ease of doing business for MSMEs and to encourage their greater participation on TReDS, it is proposed to dispense with the requirement of due diligence of MSMEs while onboarding on TReDS platforms.

A comprehensive review of other extant instructions has also been undertaken, and draft directions will be issued shortly for public consultation, he added.

For further development of the term money market, Malhotra said, "we have decided to permit certain additional categories of non-bank entities in this market segment. At present, only banks and standalone primary dealers (SPDs) are eligible to participate in this market. We are also enhancing the borrowing limit of SPDs in the term money market." An active-term money market, apart from providing an alternative funding avenue to the market participants, also helps in enhancing monetary policy transmission by creating a link between the overnight money market and longer-term interest rates.

At present, only banks and standalone primary dealers are eligible to participate in the term money market, with certain prudential limits.

"With a view to further enhance the depth of participation and liquidity in the term money market segment, it has been decided to expand the participant base in the term money market segment to include non-bank participants viz., AIFIs, NBFCs, including housing finance companies, companies, etc. and enhance the borrowing limit in the term money market for standalone primary dealers," it said.

The revised directions are being issued separately, it added.