RBI introduces new framing rules, public to get up to 21 days to provide feedback on draft regulations
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With an aim to improve transparency and stakeholder engagement, the Reserve Bank of India (RBI) has introduced the process of seeking public feedback on draft regulations and conducting an impact analysis before issuing any new guidelines. According to the Framework for Formulation of Regulations released on Wednesday, the central bank will allow stakeholders up to 21 days to provide feedback on draft regulations as it adopts a consultative approach.
As a result, before issuing any regulation, the RBI will now publish a draft on its official website, along with a statement explaining the legal authority, objectives, and likely impact of the proposed measure. "The bank shall provide at least 21 days to the stakeholders and members of the public to submit their comments," RBI stated.
If the final regulation significantly differs from the draft version, the RBI may initiate a fresh round of consultation. Additionally, the RBI has kept the door open for issuing discussion papers to encourage early engagement on complex regulatory issues. “In particular, it may, where deemed necessary, issue a discussion paper eliciting responses to issues and questions for consultation, before preparing and publishing the draft of the regulation,” stated the RBI.
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Before finalising any regulation, the RBI will conduct an impact analysis to assess its implications. The framework also mandates a periodic review of existing regulations, considering factors such as court rulings, global best practices, operational experience, and changing economic environments. “This will not only ensure that regulations remain relevant and effective, but also help reduce redundancies,” the RBI stated.
The new strategy applies to all regulations, directions, guidelines, notifications, orders, policies, specifications, and standards issued under RBI’s legal mandate, and other laws as deemed appropriate. “The framework seeks to standardise the process of making regulations in a transparent and consultative manner after conducting impact analysis, as may be feasible," the policy statement read.
The framework outlines clear principles and procedures for the formulation, amendment, and review of regulations issued by the RBI.
The new framework applies to the Reserve Bank of India Act; the Banking Regulation Act, 1949; the National Housing Bank Act; the Payment and Settlement Systems Act, 2007; the Credit Information Companies (Regulation) Act, 2005; the Factoring Regulation Act, 2011; the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act; the Foreign Exchange Management Act, 1999; the Government Securities Act, 2006; the Prevention of Money Laundering (Maintenance of Records) Rules, 2005; and the Special Economic Zones Act, 2005.
While the framework promotes broad stakeholder consultation, it exempts certain categories of regulations, such as those related to internal administration, procedural changes with no material impact, and entity-specific directives. Moreover, the RBI retains the discretion to bypass or modify the framework in cases where confidentiality, urgency, or public interest requires it.
The framework also includes a savings clause that clarifies that existing regulations will remain valid, although future amendments will follow the new procedure. With this structured approach, the RBI is aiming to enhance regulatory effectiveness while balancing the needs of the financial sector and the broader public consent.