The Reserve Bank of India (RBI) on Thursday issued new rules for its regulated entities like banks, NBFCs and housing finance companies to recognize their Self Regulatory Organizations (SROs). This SRO framework will be uniform for all SROs in all sectors, which lays down the broad objectives, eligibility criteria, functions, governance standards etc.
SROs are required to follow the comprehensive framework issued by the RBI, through which SROs can be recognized. Broad membership criteria and other terms and conditions also prescribe the framework issued by the Reserve Bank, to be followed by SROs.
The framework issued by the Reserve Bank states that an SRO is expected to follow a set of broad objectives for the betterment of the sector they represent, promote growth and broader Address key industry concerns within the financial system.
The following objectives are expected to be achieved by an SRO:
* Assist in policy-making by collecting relevant regional information and share it with the Reserve Bank.
* Encourage a culture of research and development within the sector, which will encourage innovation and all while ensuring the highest standards of compliance and self-governance.
* Act as the collective voice of its members in engagement with the Reserve Bank, government authorities or other regulatory and statutory bodies in the country.
The RBI further stated that recognized SROs will continue to be governed under the same terms and conditions under which they were recognized, unless this framework is specifically extended to such SROs.
RBI said that the SRO will have to interact with it from time to time. They are expected to present their ideas or suggestions by looking at and understanding the broader picture of the industry/segment.
The Reserve Bank can either audit the books of the SRO or get the books of the SRO audited by an audit firm if required.