The Finance Ministry has sought feedback from key stakeholders in the financial system on whether compliances under major Acts administered by the Department of Financial Services (DFS) can be rationalised.
This exercise is aimed at making the regulatory framework simple and to rationalise the compliance burden for citizens and business.
The ministry, which sought feedback from banks, insurance companies, microfinance institutions and a couple of large non-banking finance companies, said the key objective of this exercise is to provide services in a time-bound, transparent, and predictable manner with minimum human interface.
The major Acts administered by the DFS that are being considered for rationalisation of compliances are: the Reserve Bank of India (RBI) Act, 1934; the Banking Regulation (BR) Act, 1949; the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999; the Insurance Act, 1938; the Credit Information Companies (Regulation) Act, 2005; and the National Housing Bank (NHB) Act, 1987. The ministry observed that although the list of some compliances under major Acts that has been prepared is not exhaustive, it requested financial sector business entities/ industry associations to examine the matter from the point of view of compliances required to be fulfilled by the industry and the public whom the industry serves.
This move by the ministry to seek industry feedback on rationalisation of compliances under various Acts, Regulations, Directions, Master Circulars/ Directions, and other subordinate legislation comes in the backdrop of India’s rank improving to 63 (among 190 countries) in October 2020 in World Bank’s ‘Doing Business Report’ from 77 in October 2019.
In a speech in September 2019, MK Jain, Deputy Governor, RBI, emphasised that it is very important for banks to demonstrate a good compliance culture to maintain their reputation and win the trust of customers, investors and regulators. Such culture is important for banks to avoid poor conduct and loss of trust.