A year of disruption: How RBI Governor Sanjay Malhotra rewrote the rulebook with 81 regulatory changes

Sanjay Malhotra, Governor, Reserve Bank of India

As Reserve Bank of India (RBI) Governor Sanjay Malhotra completes his first year in office, the central bank has emerged from one of its most active regulatory periods in recent years, issuing 81 regulatory changes and implementing sweeping reforms across banking, markets and compliance frameworks.

According to data compiled from RBI website, Malhotra’s first year saw continuous updates to master directions, revisions to exposure norms, changes in foreign exchange management rules and new guidelines across lending, capital markets and consumer protection. But the most significant wave of changes came this October.

Malhotra assumed office as RBI Governor on December 11, 2024.

“There is quite a lot of regulatory clarity in the way business is to be done and RBI has taken a decision on quite a few items which were pending for deliberations and drafts and discussions. Generally, the approach has been to take consensus of the stakeholders and then issue the guidelines, so, the industry has also benefited with a lot of regulatory certainty,” said Sanjay Agarwal, Senior Director at CareEdge Ratings.

On October 1, the RBI announced over 21 deregulatory measures in a single day, marking one of the largest one-day policy overhauls in the central bank’s history.

Key moves included allowing banks to finance mergers and acquisitions, ending a long-standing prohibition sought to be lifted for more than a decade, raising limits on loans against shares, REITs and InvITs by removing the cap on loans against listed debt securities, and proposing revisions to External Commercial Borrowing (ECB) norms to give corporates more flexibility in overseas funding.

Further, removing limits on banks’ credit exposure to large corporates and providing a roadmap for banks to transition to the Expected Credit Loss (ECL) provisioning framework from April 2026.

The scale and speed of the deregulation drew attention across the financial sector, with bankers calling it one of the most impactful sets of announcements in recent years.

Top 10 regulatory changes by Sanjay Malhotra in one year

Along with rule changes, Governor Malhotra launched a major internal initiative to simplify India’s regulatory landscape. The RBI has consolidated 3,809 circulars into updated master directions, scrapped 5,673 obsolete circulars that were no longer relevant, and streamlined processes to improve ease of compliance across the financial system.

The project, initiated in June 2025, involved a cross-functional team from the Department of Regulation and 37 officers from multiple departments. The central bank said the effort aimed to eliminate outdated instructions and create a more coherent regulatory structure.

“The process of consolidation of regulatory norms brings a lot of clarity in the way the stakeholders have to be governed and the system has to be operated,” Agarwal added.

The 81 regulatory changes issued between December 2024 and December 2025 span areas including foreign exchange, priority sector lending, project finance, housing finance, Basel norms, digital payments, and cooperative banking.

Industry experts say the reforms point to a broader shift in the RBI’s regulatory philosophy toward simplification, greater operational freedom for institutions and improved alignment with global standards.

As Malhotra enters his second year, policymakers and markets will watch how the central bank builds on its sweeping first-year agenda, particularly the rollout of the ECL framework and further rationalisation of financial-sector regulations.