RBI Strengthens Risk Reporting For Banks, NBFCs With New Directives

The Reserve Bank of India (RBI) on Tuesday has issued directives to both banks and non-banking finance companies (NBFCs) operating domestically and internationally. The new guidelines, outlined in the master direction on the filing of supervisory returns for supervised entities, aim to streamline reporting processes, ensuring clarity, brevity, and harmonisation across the sector.

Under the revised guidelines, commercial banks are now required to file audited returns within 5 working days from the date of signing the auditor's report, down from the previous timeline of 7 days.

Similarly, other reporting requirements have also been adjusted. For instance, the Balance Sheet Analysis (BSA)-Annual Return must be submitted within 5 working days from the auditor's report date, while the Interest Rate Sensitivity Return (IRS) for commercial banks should be filed within 15 days for every month.

Moreover, the RBI mandates that half-yearly or quarterly reviews of accounts of public sector banks-review reports by statutory central auditors (SCAs)-should be submitted within 21 days of receiving the report from the SCAs. For urban cooperative banks, ALM 2 and ALM 3 (fortnightly) returns are to be submitted within 7 days from the reference date.

The central bank emphasised that these changes are part of a broader initiative to simplify compliance procedures for regulated entities, following recommendations from the Regulations Review Authority (RRA 2.0) and an internal working group of the RBI.

"This is part of a series of steps initiated by the RBI to cut the burden of compliance on the regulated entities," the RBI said in a release.

The master direction issued by the RBI aims to provide a comprehensive framework for understanding the purpose of these returns and to standardise the timelines for their submission. By implementing these measures, the RBI aims to bolster risk management practices and ensure the stability and resilience of the banking and NBFC sectors in both domestic and international operations.