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RBI must conduct periodic reviews to better ease of compliance

The Regulations Review Authority is required to seek feedback from the regulated entities to simplify “procedures and enhancement of ease of compliance”. The aim of this exercise was to streamline reporting mechanism, revoke obsolete instructions, and obviate paper-based submission of returns 

November 23, 2021 / 04:42 PM IST
Representative image (Source: ShutterStock)

Representative image (Source: ShutterStock)

The World Bank’s Doing Business rankings were in the news recently. The World Bank put an embargo on further publishing on the rankings. There have been allegations that the rankings have been compromised under political pressure from select nations. While it is highly welcome to clean up the rankings, the idea of making business easier across the economies has merits. The rankings show how certain regions suffer from high compliance and regulatory burdens. If the leaders understand the lessons correctly, they could boost business, and economic growth by merely easing these said burdens.

In similar spirit, the RBI had constituted the Regulations Review Authority (RRA) in April to reduce the compliance burden on RBI-regulated entities. The RRA was required to review all the existing regulations, circulars, and instructions, and make them “more effective by removing redundancies and duplications, if any”.

The RRA was also required to seek feedback from the regulated entities to simplify “procedures and enhancement of ease of compliance”. The aim of this exercise was to streamline reporting mechanisms, revoke obsolete instructions, and obviate paper-based submission of returns. The RBI appointed Deputy Governor Rajeshwar Rao as the authority of the RRA, signalling the importance of this clean-up.

This is not the first time the RBI has organised an RRA. In March-1999, the RBI instituted the first RRA (RRA 1.0) whose job was the same to simplify regulatory structure. The authority of RRA was then RBI Deputy Governor YV Reddy. The RRA 1.0 was also established for a year, but its contract was extended for another year given the volume of work. The RRA 1.0 received 235 applications, and more than 400 suggestions, pertaining to various functional areas of the RBI. The review streamlined the RBI’s functioning with the public, and rationalised a number of statistical returns and reports. The review also led to merger of several circulars into subject-wise master circulars, a practice RBI continues till date.