RBI consolidates reporting norms for REs, eases compliance burden

Consolidates 21 existing instructions; Audited returns to be filed within five days of signing reports

To reduce the burden of compliance on regulated entities (REs), the Reserve Bank of India (RBI) on Tuesday issued a master direction that removed obsolete instructions and consolidated 20 existing instructions, including one for finance companies. While specifying timelines for reporting, it also reduced time for filing returns. 

“In order to create a single reference for all supervisory returns and to harmonise the timelines for filing of returns, all the relevant instructions have been rationalised and consolidated into a single master direction,” the RBI said.

The direction has been issued to bring clarity, brevity, and harmonisation to the instructions issued to various supervised entities for submission of returns. This step was based on the recommendations of the Regulations Review Authority and an internal working group of the RBI.

On responsibilities of the board and senior management of REs, the regulator said the risk data aggregation capabilities and risk reporting practices should be fully documented and be subject to high standards of validation. The validation of risk data aggregation and risk reporting practices will be conducted using staff with specific IT, data, and reporting expertise.

The RBI has asked the entities to ensure that adequate resources are deployed and include the identification, assessment, and management of data quality risks as part of its overall risk management framework. The framework should cover standards for both outsourced and in-house risk data-related processes, policies on data confidentiality, integrity and availability. 

Referring to changes in norms for filing returns, the RBI said all audited returns should be filed within five days of the auditor's signing reports. Earlier, REs were required to file audited returns within seven days from completion of the statutory audit of books of accounts. 

Now, the regulatory structure for non-banking finance companies (NBFCs) comprises four layers. The RBI fine-tuned the schedule of returns for NBFCs to reflect these four layers and the revised framework.

The regulator said the supervised and regulated entity would design, build, and maintain the data architecture and supporting information technology (IT) infrastructure for accurate, complete, and timely data aggregation and reporting. This would be for normal times as well as times of stress or crisis. The data aggregation and reporting practices should be considered as an essential part of the business continuity planning process and subject to a business impact analysis. 

All returns and risk reports should be reconciled with the entity’s own sources, including accounting data where appropriate, to ensure accuracy and completeness of the same. The regulated entities should strive to achieve a higher degree of automation in generation of data for filing of returns, the RBI said.