RBI issues omnibus framework for recognizing self-regulatory organizations for banks, NBFCs, fintechs
The Reserve Bank of India (RBI) has issued new rules for recognizing self-regulatory organizations (SROs) for its regulated entities such as banks, NBFCs, and housing finance companies.
A framework for broad membership criteria and other terms and conditions to be followed by the SROs for grant of recognition by the Reserve Bank has also been issued.
The omnibus SRO framework prescribes the broad objectives, functions, eligibility criteria, and governance standards, which will be common for all SROs, irrespective of the sector.
The framework states that an SRO is expected to adhere to a set of overarching objectives for the betterment of the sector they represent, foster advancement, and address critical industry concerns within the broader financial system.
The RBI also said that existing SROs that have already been recognized shall continue to be governed by the terms and conditions under which they were recognized unless this framework is specifically extended to such SROs.
An SRO is expected to promote a culture of compliance among its members by encouraging progressive practices and conventions. Special attention must be given to extending guidance and support, particularly to smaller entities within the sector.
The RBI said that the SRO must also act as the collective voice of its members in engagements with the Reserve Bank, government authorities, or other regulatory and statutory bodies, in India.
In addition, it has to collect and share relevant sectoral information with the Reserve Bank to aid in policy-making and encourage a culture of research and development within the sector to encourage innovation while ensuring the highest standards of compliance and self-governance.
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