RBI Announces Key Regulatory, Supervisory, and Market Reforms to Enhance
Banking Efficiency
I.
Regulations
1.
CRAR computation simplified
o
Reserve Bank of India proposes removing restriction
on including quarterly profits in CRAR.
o
Earlier condition linked to NPA provisioning
deviation (25%) to be dispensed with.
2.
Removal of Investment Fluctuation Reserve (IFR)
o
IFR requirement to be withdrawn for commercial
banks (excluding certain categories).
o
Rationale:
§ Existing market
risk capital norms already in place.
o
Guidelines for other banks to be revised and
harmonised.
3.
Rationalisation of Board agenda
o
RBI reviewing matters placed before bank boards.
o
Objective:
§ Reduce
compliance burden
§ Enable better
focus on strategy and risk governance
II.
Supervision
4.
Consolidation of supervisory instructions
o
RBI consolidating supervisory guidelines into 64
Master Directions.
o
Covers multiple functional areas.
o
Builds on earlier consolidation of 9000+
circulars into 238 Master Directions (2025).
o
Aim: simplification and reduced compliance costs
III.
Payment Systems
5.
Easier onboarding for MSMEs on TReDS
o
Trade Receivables Discounting System onboarding
simplified.
o
Proposal to remove due diligence requirement for
MSMEs.
o
Goal:
§ Improve access
to working capital
§ Enhance
ease of doing business
IV.
Financial Markets
6.
Expansion of term money market
o
Participation widened beyond banks to include:
§ NBFCs,
AIFIs, housing finance companies, corporates
o
Borrowing limits for primary dealers to be enhanced
o
Objective:
§ Increase market
liquidity
§ Strengthen
monetary policy transmission
Conclusion: The
Reserve Bank of India measures focus on simplification, deregulation, and
market deepening, aiming to reduce compliance burdens, improve liquidity,
and strengthen the overall financial system efficiency.
Statement on Developmental and Regulatory Policies
[RBI Press
Release/08.04.2026]
This Statement
sets out various developmental and regulatory policy measures relating to (i) Regulations; (ii) Supervision; (iii) Payment Systems; and
(iv) Financial Markets:
I. Regulations
1. Review
of guidelines for inclusion of Quarterly Profits in Capital to Risk-weighted Assets
Ratio (CRAR) computation – Commercial Banks
As per the
extant guidelines, commercial banks (excluding Regional Rural Banks and Local Area
Banks) are permitted to include quarterly net profits in the calculation of CRAR
provided that the incremental provisions made for Non-Performing Assets (NPAs) at
the end of any of the four quarters of the previous financial year, have not deviated
more than 25 per cent of the average of the four quarters. On a review, it is proposed
to dispense with this condition. The draft amendment directions in this regard will
be issued for public comments shortly.
2. Review
of Guidelines on Investment Fluctuation Reserve (IFR)
Banks currently
maintain Investment Fluctuation Reserve (IFR) as an additional buffer against depreciation
in the value of their investments, subject to mark-to-market (MTM) requirements.
Currently, commercial banks (including Local Area Banks, but excluding Small Finance
Banks, Payment Banks and Regional Rural Banks) already maintain capital charge for
market risk and also follow revised norms on classification, valuation, and operation
of investment portfolio. In consideration of these applicable prudential requirements,
it is proposed to dispense with the IFR requirement for such commercial banks. The
existing guidelines for other bank categories are also being revised to address
the operational challenges encountered by such banks in complying with the regulatory
thresholds on IFR and to harmonise instructions across bank categories, thereby
enhancing regulatory clarity and consistency. Draft directions in this regard will
be issued shortly for public consultation.
3. Review
of matters placed before the Boards of the Banks
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 rationalization
of all such instructions. Draft directions in this regard will be issued shortly
for public consultation.
II. Supervision
4. Consolidation
of 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, 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 9000 existing regulatory circular/ guidelines
into 238 function-wise Master Directions (MDs), specific to each category of regulated
entity. A similar exercise has now been carried out for the supervisory instructions.
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.
III. Payment
Systems
5. Simplifying
the onboarding process of MSMEs in Trade Receivables Discounting System (TReDS)
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.
IV. Financial
Markets
6. Development
of 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 (a) 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 (b)
enhance the borrowing limit in the term money market for standalone primary dealers.
The revised directions are being issued separately.