RBI announces steps to improve ease of doing business
What's the story
The Reserve Bank of India (RBI) has announced a series of non-policy measures to simplify doing business and rationalize regulatory requirements. The announcement was made today, along with the decision to keep the repo rate unchanged. As part of its governance reforms, the central bank plans to revise guidelines on matters requiring bank boards' attention for more efficient time utilization.
Regulatory simplification
Ongoing efforts to streamline regulations
The RBI's move comes after previous attempts to simplify regulations, such as merging more than 9,000 instructions into 238 master directions. The central bank has now completed a similar exercise for supervisory instructions as well. This is part of its ongoing effort to make compliance easier and more efficient for banks and other financial institutions.
Business support
Support for MSMEs and banks
In a bid to support Micro, Small and Medium Enterprises (MSMEs), the RBI has proposed to remove due diligence requirements at the time of onboarding entities onto the TReDS platform. This step is expected to simplify access to receivables financing, and improve liquidity for smaller businesses. The central bank also proposed scrapping the need for banks to maintain an Investment Fluctuation Reserve (IFR) as an additional buffer against depreciation in investment values.
Enhancement
Enhancing money market participation
The RBI has announced measures to increase participation in money markets. It has proposed permitting more categories of non-bank entities to operate in these segments, a move that could boost liquidity and improve price discovery. The central bank also plans to raise the borrowing limits of standalone primary dealers in the term money market for smoother market functioning.