RBI Circular Cleanup: The Reserve Bank of India has done something in the last few months which is being discussed everywhere. The bank has made a big clarification of its old rules. In this entire action which lasted for six months, RBI checked one by one the rules and orders accumulated over the years and decided to remove those which had become useless.

The most interesting thing is that RBI scrutinized a total of 9,446 circulars. Of these, 5,673 circulars were scrapped because they were either no longer needed or were too old and did not fit into today’s system. The remaining more than 3,800 circulars were combined into only 244 new master directions. From now on, the banking system will run on the basis of these 244 simple and clear instructions.

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The biggest ‘cleanliness’ of 6 months

This was not a small action. The RBI team sat for months and read the rules issued from 1935 till now.
Many circulars were so old that they had no role left in today’s banking system.

The team looked at each circular and decided:

• Which rule is no longer needed?


• Who should update?


• Which rules can be combined together and simplified?

The result of this entire exercise was that now banks and financial institutions will not have to deal with a lot of old papers. Everything will be very clear and easy to understand.

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It was also difficult to identify what should be removed and what should remain.

RBI Deputy Governor Shirish Chandra Murmu said that this task was the most difficult review in the history of the institution. Imagine thousands of documents, rules from different years, and having to sit through each one and see if it is needed now or not.

The team also had to decide:

• Which rule is to be followed?


• Who needs to be added to the master direction?


• Who else should be deleted forever?

The entire work was done in a very systematic manner by creating different categories.

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Who will benefit from this? (RBI Circular Cleanup)

RBI had been trying for many years to make banking rules simpler and less complex.
After this mega-cleanup:

• The rules will be easy to read and understand


• Compliance burden on banks will reduce


• There will be no confusion in the guidelines


• The entire sector will work in a more transparent manner

This means that now banks and financial companies will be able to work without any complications.

The government is also busy cleaning up old laws.

Not only RBI, the Central Government is also engaged in the process of removing old and useless laws and updating them. For this reason, Finance Secretary Sanjay Malhotra is also continuously saying that the simpler the rules, the better the system will work. This big step by RBI is part of that change.

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