Source: ET
Context:
The Reserve Bank of India (RBI) has issued 244 Consolidated Master Directions (MDs) to streamline and rationalise decades of regulatory instructions for Regulated Entities (REs). This step follows a review of around 3,500 prior directions, circulars, and guidelines and aims to reduce compliance burden.
Key Highlights:
Customer Consent and Choice
- Banks must obtain explicit consent from customers for providing digital banking services, which should be recorded/documented.
- Mandatory opt-in prohibited: Customers cannot be forced to use digital channels to avail banking facilities like debit/credit cards.
- Banks may collect mobile numbers for transaction alerts and KYC compliance.
- Customers retain the sole right to apply for digital banking services.
Risk Mitigation Requirements
- Banks must implement risk-based controls, including:
- Transaction limits (per transaction, daily, weekly, monthly)
- Transaction velocity checks
- Fraud detection systems
- Compliance with RBI and payment system operator guidelines (e.g., NPCI, VISA, Mastercard) is mandatory, applying the stricter standard when requirements differ.
- Continuous adherence to DPSS instructions under the Payment and Settlement Systems Act, 2007.
Accessibility and Network Independence
- Mobile banking services (excluding mobile apps) must be accessible across all mobile networks.
- Ensures network independence, promoting financial inclusion.
Monitoring and Surveillance
- Banks must have transaction monitoring systems to track unusual patterns.
- Outlier transactions may require prior confirmation from the customer.
- Fraud Risk Management Policy should guide these risk assessment protocols.
Restrictions on Third-Party Offerings
- Third-party products and services, including subsidiaries, JV partners, or promoter group entities, cannot be displayed on digital channels unless RBI permits.
Communication Guidelines
- Banks must clearly communicate that SMS/email alerts will be sent only to registered mobile numbers/emails.
Regulated Entities Covered
The consolidation covers the following 11 types of entities:
- Commercial Banks
- Small Finance Banks
- Payments Banks
- Local Area Banks
- Regional Rural Banks
- Urban Cooperative Banks
- Rural Cooperative Banks
- All India Financial Institutions
- Non-Banking Financial Companies (NBFCs)
- Asset Reconstruction Companies (ARCs)
- Credit Information Companies
Objective
- Reduce compliance complexity and duplication.
- Make it easier for REs to interpret and implement regulatory instructions.
- Strengthen transparency and governance by organising directives systematically.
