RBI Overhauls 80-Year-Old Framework: 9,445 Old Circulars Replaced by 244 Consolidated Master Directions

The Reserve Bank of India (RBI) has announced its biggest-ever regulatory reform, consolidating 9,445 old circulars into 244 Master Directions. The move aims to modernize India’s banking system, simplify compliance, and introduce digital banking guidelines for a more transparent and efficient financial ecosystem.

RBI Announces Historic Regulatory Overhaul

The Reserve Bank of India (RBI) has taken a landmark step in modernizing the Indian banking system by consolidating thousands of circulars and guidelines into 244 Consolidated Master Directions. This announcement was made by RBI Deputy Governor Shirish Chandra Murmu at a press conference in Mumbai. The new framework also includes the long-awaited digital banking guidelines.

This reform is expected to not only modernize and simplify banking operations but also reduce compliance costs for regulated entities and improve ease of doing business. RBI has described this initiative as a major milestone in its brand-new regulatory transformation journey.

From Thousands of Circulars to 244 Master Directions

Deputy Governor Murmu explained that over the decades, RBI had issued thousands of circulars, notifications, and guidelines, many of which were repetitive, overlapping, or outdated. After 5–6 months of extensive study, RBI reorganized these directives into a structured and user-friendly format.

• 9,445 circulars were reviewed:

  • 3,809 circulars incorporated into 244 Master Directions

  • 5,673 circulars declared obsolete and removed

RBI clarified that this exercise was purely structural; the content of existing regulations remains unchanged. The consolidation simply removes redundancies.

Relief for the Banking Sector

The consolidation significantly eases the compliance burden for banks, NBFCs, payment banks, small finance banks, and regional rural banks. Previously, institutions had to navigate multiple circulars and updates, often conflicting with one another. Now, all guidelines are centralized in 244 Master Directions, easily accessible to all.

This initiative is one-time, although these Master Directions will be updated periodically. Going forward, RBI will no longer issue “circulars”; any new instructions will come as amendments to these Master Directions.

Special Focus on Digital Banking

Murmu confirmed that the new Consolidated Directions include 7 Master Directions for Digital Banking Channels Authorisation. This reflects RBI’s commitment to keeping pace with the rise of digital payments and digital banking, including UPI, net banking, mobile banking, digital lending, and payment services.

Reviewing Circulars Up to 80 Years Old

The review was so comprehensive that RBI examined circulars issued 70–80 years ago. For example, the April 22, 1944 circular titled “Advance against Government Securities” was part of this review.

This demonstrates RBI’s intent to modernize its entire regulatory framework, not just recent directives.

Stakeholder Feedback Incorporated

RBI had released a draft of the consolidation in October 2025 for public comments. Over 770 comments were received, many of which were incorporated into the final Master Directions. Suggestions that sought changes to the original regulations were not acted upon, as this exercise focused solely on consolidation.

Applicability of the 244 Master Directions

The 244 Consolidated Master Directions now apply to 11 types of regulated entities:

1. Commercial Banks

2. Small Finance Banks

3. Payments Banks

4. Local Area Banks

5. Regional Rural Banks

6. Urban Co-operative Banks

7. Rural Co-operative Banks

8. All India Financial Institutions

9. NBFCs

10. Asset Reconstruction Companies

11. Credit Information Companies

This consolidation ensures a uniform, clear, and simplified regulatory framework across all banking and financial institutions.

Importance for General Customers

The reform is not only significant for banks but also for general customers. It will:

• Improve transparency in banking processes

• Simplify understanding of rules

• Strengthen digital banking experience and security

• Reduce compliance costs for banks, enhancing efficiency and customer service

For decades, there have been calls to modernize outdated banking regulations. RBI’s historic move is expected to boost India’s banking and financial ecosystem and usher in a new era of regulatory clarity.