RBI Issues 244 Consolidated Master Directions to Simplify Compliance

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:

1. Commercial Banks
2. Small Finance Banks
3. Payments Banks
4. Local Area Banks
5. Regional Rural Banks
6. Urban Cooperative Banks
7. Rural Cooperative Banks
8. All India Financial Institutions
9. Non-Banking Financial Companies (NBFCs)
10. Asset Reconstruction Companies (ARCs)
11. 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.