RBI increases social engagement 72 consultations in 2021–2024 | Financial news

The Reserve Bank of India (RBI) has conducted 72 public consultations in various regulatory and supervisory areas as it expands its public engagement, according to the RBI’s annual report.

The Department of Regulation (DoR) in the RBI, which is entrusted with formulating guidelines for regulated entities, conducted 21 public consultations in 2023-24 as compared to six and five in the previous two years.

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The Department of Payments and Settlements (DPSS) and the Department of Supervision (DoS) have also intensified stakeholder consultations this year.

The regulator has been conducting public consultations over the last few years to obtain public views on new and key regulatory measures, incremental changes and comprehensive reviews of existing guidance.

Between 2021 and 2024, the RBI conducted 72 public consultations in various regulatory and supervisory areas, providing 15-60 days for feedback.

According to the RBI’s annual report, the central bank conducted 40 public consultations in the financial year 2023-24.

As per the Regulatory Review Authority 2.0 Recommendation 2022, the RBI is putting the draft instructions in the public domain for feedback before finalizing them.

Public consultation is carried out by publishing working group reports, discussion papers and draft guidelines on its website.

The RBI also conducts internal consultations and sets up advisory committees for detailed discussions. FAQs are issued in response to stakeholder inquiries, providing continuous feedback.

Regulatory measures on consumer loans and bank loans for NBFCs were announced on November 16, 2023, to prevent potential risks.

Post-pandemic, lending in the consumer segment has increased significantly, coupled with increasing dependence on bank loans by NBFCs, raising regulatory concerns. Despite good asset quality, prudential intervention was deemed necessary.

A participatory approach helps identify inconsistencies, gaps and stakeholder concerns, leading to more robust regulation.

The report said periodic interactions with stakeholders on monetary policy and other issues further enhance transparency and inclusiveness in policy formulation.

The Department of Supervision also initiated a series of actions in 2023-2024 to strengthen on-site and off-site supervision, modernize the stress testing model, and strengthen the early warning and fraud risk management system.

The FinTech division has expanded the scope and reach of pilot programs for Central Bank Digital Currency (CBDC) – Wholesale (CBDC-W) and CBDC Retail (CBDC-R); and launched a pilot project for a public technology platform enabling seamless lending.

On September 21, 2023, the RBI issued draft general guidelines on willful and gross misconduct.

The proposed core guidelines consolidated all instructions on willful and large defaulters, including modifications based on court judgments and feedback from the Indian Banks Association, banks and other stakeholders.

As stated in the annual report, guidance will be issued after assessing these comments.

“The main channel for public consultation remains the solicitation of written comments/opinions on draft regulatory policies, while other means of public consultation, such as stakeholder discussions and the establishment of an independent working group/committee, are also used to obtain a holistic view of technical and complex regulatory issues,” the RBI said, adding that the need for public consultation is also assessed while assessing political risks.