RBI ease of business reforms RBI ease of business reforms to boost MSME credit and deepen money markets

MUMBAI: The Reserve Bank of India on April 8, 2026 set out a series of targeted regulatory and supervisory changes to ease doing business, improve capital efficiency, and deepen financial markets, while responding to banker feedback and preserving stability amid global uncertainty linked to the West Asia conflict.

The central bank said it has reviewed instructions across directions and regulations to streamline bank board agendas, resulting in revised requirements for board-level attention. Boards will now focus on policy formulation, while operational matters shift to management, a move aimed at reducing procedural load and enabling quicker strategic decisions in a volatile economic environment.

The RBI said it has completed a consolidation of supervisory guidelines, following its 2025 exercise that reduced over 9,000 regulatory instructions into 238 Master Directions. The consolidated supervisory instructions will be issued shortly, which is expected to simplify compliance and allow banks to deploy more resources toward lending and risk management.

The regulator proposed removing due diligence requirements when onboarding MSMEs onto banks’ digital platforms. This step is intended to accelerate credit access for small businesses, which remain central to employment and growth, by easing their entry into formal lending channels.

Two measures were announced to strengthen capital adequacy frameworks. The RBI will remove NPA provisioning norms linked to the inclusion of quarterly profits in capital calculations, and it will eliminate the investment fluctuation reserve, which was introduced earlier as a buffer against investment depreciation but has become less relevant with changes in prudential norms. These changes are expected to improve capital efficiency and support lending capacity.

The RBI also said it will expand participation in the term money market by allowing more non-bank entities to operate in this segment, which is currently limited to banks and standalone primary dealers. Borrowing limits for standalone primary dealers will be raised. This is expected to enhance liquidity in longer-tenor instruments and support the development of the yield curve, reducing reliance on short-term funding.

The central bank said these measures are designed to sustain business momentum while maintaining vigilance, as external risks from geopolitical tensions continue to weigh on global growth and inflation outlooks.
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