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MUMBAI — The RBI on Thursday issued an omnibus framework for recognising self-regulatory organisations (SROs) for its regulated entities such as banks, NBFCs and housing finance companies.
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 also lays down the broad membership criteria and other terms and conditions to be followed by the SROs for grant of recognition by the Reserve Bank.
The framework states that an SRO is expected to adhere to a set of overarching objectives for betterment of the sector they represent, foster advancement and address critical industry concerns within the broader financial system.
In particular, an SRO is expected to achieve the following objectives:
* Promote a culture of compliance among its members by encouraging progressive practices and conventions. Special attention must be given on extending guidance and support, particularly to smaller entities within the sector.
* Act as the collective voice of its members in engagements with the Reserve Bank, government authorities or other regulatory and statutory bodies, in India.
* Collect and share relevant sectoral information to the Reserve Bank to aid in policy-making.
* Encourage a culture of research and development within the sector to encourage innovation while ensuring the highest standards of compliance and self-governance.
The RBI also said that existing SROs that have already been recognised shall continue to be governed by the terms and conditions under which they were recognised, unless this framework is specifically extended to such SROs.