Sweeping changes in the offing

Mint Road as well as North Block may move to finetune regulations for Viksit Bharat 2047, reports Raghu Mohan

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THE REGULATORY TOPOGRAPHY

The setting up of the Regulatory Review Cell (RRC) by Mint Road to be housed in its Department of Regulation (effective October 1, 2025) was a critical step. Its mandate: To ensure regulations are subject to a comprehensive and systematic internal review every 5-7 years.

In effect, the RRC built on the Regulatory Review Authority (RRA 2.0). The latter drew from the best practices of global central banks. Be it on consultation before policy formulation, feedback from regulated entities (REs), structured meetings with banks’ corner room occupants and senior compliance officials, key stakeholders and trade bodies.

Over 400 circulars were withdrawn. It was the “open-door policy” of the Reserve Bank of India (RBI) to foster a better engagement of REs with it. RRA 2.0 was a follow-through on YV Reddy’s decision as deputy RBI governor to set up its first edition in 1999 (he was later appointed governor in September 2003 and served in the position for five years).

The polestar for Reddy may well have been the 96th Report of the Law Commission of India (1984): “Every legislature is expected to undertake what may be called the periodical spring-cleaning of the corpus of its Statute Law, in order that dead wood may be removed, and citizens may be spared of the inconvenience of taking notice of laws which have ceased to bear any relevance to current conditions.”

The forward movement with RRC also puts the spotlight on a key initiative flagged in the Union Budget FY24 by Finance Minister Nirmala Sitharaman. She had held forth on the need for better governance and investor protection in the banking sector. And, the FM proposed amendments to the RBI Act, 1934; the Banking Regulation Act, 1949; and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. It was felt that these issues would gather momentum after a new government was sworn in post the general elections in June 2024.