Follow the public consultation process: RRA’s suggestion to RBI
The Regulatory Review Authority (RRA 2.0) has recommended the Reserve Bank of India (RBI) to completely eliminate paper filings and follow a public consultation process for all major regulatory changes being considered.
In addition, Instructions to Regulated Entities (REs) should contain a brief statement of purpose underlying the rationale for their issuance.
The RRA Advisory Group (led by Swaminathan J, Managing Director of State Bank of India) has recommended the withdrawal of 714 regulatory instructions which have become obsolete or redundant and have not been explicitly withdrawn.
The RRA noted that although REs are required to comply with regulatory instructions, it is also recognized that any deviation in the understanding, interpretation and implementation of the instruction may lead to compliance of the instructions in the letter, but not in spirit.
Therefore, the authority recommended that the regulatory instructions contain a brief statement of purpose underlying the rationale for issuing the instructions.
“This statement may help readers understand the need for regulation. In addition, it was recommended that the instructions be supplemented with FAQs/guidance notes and illustrations, if necessary,” the Authority said.
The RRA recommended creating a separate webpage – “Regulatory Reporting” on the RBI website. All information relating to regulatory, prudential and statutory reporting would be consolidated into a single source on the RBI website.
The Authority has recommended the complete elimination of paper declarations and has identified 65 regulatory declarations which should either be deleted/merged with other declarations or converted to online declarations.
A periodic review of regulatory or supervisory statements at least once every three years has been suggested.
The RRA recommended moving from the current fortnightly data submission requirement to a data reporting system on the 15th and last working day of each calendar month.
This would improve intertemporal comparison of banking data and other economic variables and improve data quality.
June 14, 2022