RBI strengthens public engagement 72 consultations in 2021-2024
Mumbai: Security personnel stand at the RBI headquarters in Mumbai, Friday, June 7, 2024. (Photo: PTI)
The Reserve Bank of India (RBI) has conducted 72 public consultations across various regulatory and supervisory areas in the last three years as the central bank broadened its public engagement, RBI’s annual report said.
The RBI’s Department of Regulation (DoR), which is tasked with formulating guidelines for regulated entities, conducted 21 public consultations in 2023-24, compared to six and five in the previous two years.
The Department for Payments and Settlements (DPSS) and the Department of Supervision (DoS) have also intensified their consultations with stakeholders this year.
The regulator has held public consultations in recent years to seek public feedback on new and important regulatory measures, incremental changes and comprehensive reviews of existing guidance.
Between 2021 and 2024, RBI conducted 72 public consultations in various regulatory and supervisory areas, giving 15 to 60 days for feedback.
According to RBI’s annual report, the central bank has conducted 40 public consultations in the financial year 2023-2024.
Following the 2022 recommendation of the Regulations Review Authority 2.0, the RBI is posting draft instructions in the public domain for feedback before finalizing them.
Public consultations are carried out by posting working group reports, discussion papers and draft guidelines on the website.
The RBI also conducts internal consultations and sets up advisory committees for detailed discussions. FAQs are issued to answer stakeholder questions, ensuring continuous feedback.
On November 16, 2023, regulatory measures were announced in the areas of consumer credit and bank lending to NBFCs to prevent potential risks.
Post-pandemic, credit offtake in the consumer segment has increased significantly, coupled with the NBFCs’ increasing dependence on bank loans, raising regulatory concerns. Despite strong asset quality, prudential intervention was deemed necessary.
The participatory approach helps identify inconsistencies, gaps and stakeholder concerns, leading to more robust regulation.
Periodic interactions with stakeholders on monetary policy and other issues further enhance transparency and inclusiveness in policy formulation, the report said.
The Ministry of Supervision has also initiated a large number of measures in 2023-2024 to strengthen on-site and off-site supervision, renew the stress test model, and strengthen the early warning signal and fraud risk management system.
The FinTech department has expanded the scope and coverage of the central bank’s Digital Currency (CBDC)-Wholesale (CBDC-W) and CBDC-Retail (CBDC-R) pilots; and launched a pilot project for a public technology platform for frictionless credit.
On September 21, 2023, the RBI issued a draft Master Direction on Deliberate and Major Defaulters.
The proposed Master Direction consolidated all instructions on willful and major defaulters, with changes based on court decisions and feedback from the Indian Banks’ Association, banks and other stakeholders.
The guidelines will be issued after evaluating these comments, the annual report said.
“The main channel for public consultations remains seeking written comments/feedback on draft regulatory policies, while other forms of public consultations, such as stakeholder discussions and setting up an independent working group/committee, are also used to provide a holistic picture to get the technical and complex regulations. issues,” RBI said, adding that the need for public consultation is also being evaluated while assessing policy risk.
First print: June 17, 2024 | 12:11 pm IST