The Reserve Bank of India withdrew over 100 previously issued circulars citing redundancy of their effects in current times. The move comes as a result of strong recommendations for the initiative from The Regulations Review Authority. This will reduce friction in financial transactions and other interactions. While this is a boost for the economy as a whole, prima facies, it does call for closer scrutiny to evaluate its actual extend.
The withdrawn circulars primarily focus norms concerning standards of:
- Foreign Portfolio Investors and their Foreign Investments in India
- RTGS- Real Time Gross Settlement
- KYC- Know Your Customer
- AML- Anti-Money Laundering
- CFT-Combating of Financing Terrorism
RBI had set up Regulations Review Authority(RRA 2.0) in April 2021. The RRA 2.0’s primary objective is reviewing regulatory advice and instructions while ensuring to identify and remove duplicate or redundant directives. It also streamlines reporting structure to decrease the compliance burden on REs(Regulated Entities). The RRA makes sure to revoke obsolete instructions while actively taking the effort to efface paper-based returns submissions.
The RRA has engaged in extensive communication and consultations with internal and external stakeholders in the industry. It conducted a review to simplify and easily implement supervisory and regulatory directives with these parties.
Mr. Swaminathan J, MD of the State Bank of India holds the chairmanship for the prime advisory group for RRA. The group itself was formed by the RRA shortly following its own constitution.
“The RRA has been engaging in extensive consultations with both – internal as well as external stakeholders, on review of the regulatory and supervisory instructions for their simplification and ease of implementation. Based on these consultations and the suggestions of the Advisory Group, the RRA has recommended withdrawal of 150 circulars in the first tranche of recommendations,” the RBI issued a statement.
With many of the surfeit roadblocks in financial interactions and transactions removed, this is a good time for companies and entities to take new initiatives. It is prime time for them to completely digitize and optimize their processes in the financial sphere. Even the RRA promotes paperless submissions for applications and returns.
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