📚 Key RBI Regulations and Compliance Areas

RBI regulatory compliance covers a wide range of core prudential, operational, and governance-related controls, ensuring that all Regulated Entities (REs) operate safely and soundly. Compliance encompasses critical areas such as:

1. Capital Adequacy

• Governed by the Basel III framework, this requires banks and certain NBFCs to maintain minimum capital buffers against their risk-weighted assets.

• Includes Common Equity Tier 1 (CET1), Tier 1, and Tier 2 Capital requirements.

• Ensures that institutions can absorb unexpected losses and prevent insolvency in periods of stress.

• RBI mandates Capital to Risk-weighted Asset Ratio (CRAR) at 9% for banks and variable requirements for NBFCs under the Scale-Based Regulation.

2. Liquidity Norms

3. Know Your Customer (KYC) & Anti-Money Laundering (AML)

• Mandated under the Master Direction – KYC, 2016 and PMLA, 2002.

• Involves:

  • Customer Due Diligence (CDD) at onboarding and periodically thereafter.

  • Enhanced Due Diligence (EDD) for high-risk individuals/entities.

  • Ongoing monitoring of transactions to detect suspicious activities.

  • Filing of Suspicious Transaction Reports (STRs) and Currency Transaction Reports (CTRs) to the Financial Intelligence Unit (FIU-IND).

• Financial entities must have a risk-based approach to customer profiling.

4. Cybersecurity & IT Governance

• As digital transactions grow, RBI has laid down detailed Cybersecurity Frameworks for Banks (2016), NBFCs (2023), and Payment Operators.

• Key compliance aspects include:

  • Real-time fraud monitoring systems

  • Cyber Incident Reporting within prescribed timelines

  • Business Continuity Planning (BCP) and Disaster Recovery (DR) sites

  • Periodic Vulnerability Assessments and Penetration Testing (VAPT)

  • IT Governance and Audit Framework

• Failure can result in data breaches, customer losses, and regulatory penalties.

5. Loan Classification & Provisioning Norms

• Governed by RBI’s Prudential Norms on Income Recognition, Asset Classification, and Provisioning (IRACP).

• Institutions must:

  • Classify loans into Standard, Sub-Standard, Doubtful, and Loss assets.

  • Create provisioning buffers based on risk profile and default stage.

  • Identify Special Mention Accounts (SMAs) for early warning.

  • Follow updated guidelines on Resolution Frameworks for Stressed Assets.

6. Risk Management

• A core pillar of compliance that includes credit risk, market risk, operational risk, liquidity risk, and reputational risk.

• Regulated entities must:

  • Constitute a Board-level Risk Management Committee

  • Develop and implement a Risk Management Framework (RMF)

  • Use Internal Capital Adequacy Assessment Process (ICAAP) for banks

  • Align risk appetite with business strategy

• RBI regularly reviews Stress Testing, Scenario Analysis, and Risk Reporting standards.

7. Corporate Governance & Regulatory Disclosures

8. Consumer Protection & Fair Practices Code

9. Emerging Areas: ESG, Fintech, and Data Privacy

🏁 Final Word on Compliance Coverage

Each of these areas is interconnected and evolving, requiring institutions to build a compliance ecosystem that’s proactive, tech-enabled, and strategically aligned with regulatory expectations. Compliance is no longer a back-office function—it is a strategic lever for institutional credibility, resilience, and customer trust.