RBI merges thousands of circulars into master directions to ease compliance for banks

By Admin

29 Nov, 2025

The Reserve Bank of India (RBI) has taken a landmark step to simplify India's financial regulatory framework. In a major consolidation exercise, the central bank has merged thousands of legacy circulars into a streamlined set of master directions making compliance easier, clearer and more efficient for banks and financial institutions.

A Major Overhaul of the Regulatory System
Over the years, the RBI has issued circulars, guidelines and instructions to keep up with the evolving financial landscape. While necessary, this incremental rule-making had resulted in the accumulation of thousands of documents creating complexity, overlap and confusion for regulated entities.
To address this, the RBI launched a fundamental reorganisation of all regulatory instructions administered by its Department of Regulation. This marks a crucial shift in the central bank’s communication and supervisory approach.

From 9,000+ Circulars to 238 Master Directions
As part of this restructuring, the RBI has merged more than 9,000 circulars into 238 function-specific master directions. These directions are neatly aligned with individual categories of regulated entities, including:

• Commercial banks
  
  

• Cooperative banks
  
  

• Small finance banks
  
  

• Payments banks
  
  

• Non-banking financial companies (NBFCs)
  
  

• Asset reconstruction companies
  
  

• Credit information companies
  
  

This consolidation also included a parallel exercise by NABARD, which reorganised its instructions for rural and cooperative banks, bringing consistency across the regulatory ecosystem.

Greater Clarity and Ease of Doing Business
The RBI has grouped around 3,500 operative circulars into these 238 master directions, while clearly identifying outdated ones for repeal. This structured approach offers multiple benefits:

• A cleaner, more navigable regulatory landscape
  
  

• Reduced ambiguity and duplication
  
  

• Faster compliance for banks and financial institutions
  
  

• Enhanced ease of doing business throughout the sector
  
  

• Improved transparency and regulatory clarity
  
  

Supporting a Stronger Financial Sector
By streamlining regulations for commercial, cooperative, small finance and payments banks, as well as NBFCs and credit firms, the RBI aims to strengthen governance while reducing unnecessary compliance burden.
The central bank's focus is clear: to build a regulatory environment that supports efficient operations, innovation and growth, without compromising financial stability.

A Future-Ready Regulatory Framework
This consolidation is not just administrative cleaning it reflects a more modern, principle-based regulatory philosophy. With fewer, clearer, and more comprehensive master directions, financial institutions can now operate with greater confidence and speed.

As India’s financial sector continues expanding, this move positions institutions to better navigate regulatory requirements and contribute to a healthier, more resilient financial ecosystem.