RBI Invites Applications For Recognition Of Self-Regulatory Organisations For NBFCs
In March, the central bank had laid down an omnibus framework for recognising SROs.
Reserve Bank of India said on Wednesday that it has invited applications for recognising self-regulatory organisations for non-banking financial companies.
In March, the central bank had laid down an omnibus framework for recognising SROs to ensure broad objectives, functions, eligibility criteria and governance standards. The framework is common for all SROs, irrespective of the sector, the central bank had said in a statement.
Applicants must meet the eligibility criteria and guidelines mentioned under the omnibus framework, along with following instructions:
Self-regulatory entities for the NBFC sector is primarily for investment and credit companies, housing finance companies, and NBFCs engaged in the business of factoring. However, the SRO may also have other categories of NBFCs as its members.
The SRO must have at least 10% of the total number of NBFCs in the base layer, as its members to ensure fair representation to smaller NBFCs. If the entity fails to achieve this within two years of RBI's approval to function as SRO, its recognition may be revoked.
Entities looking to apply for SRO must have a minimum net worth of Rs 2 crore within a year after RBI recognises the entity as an SRO, or before it begins operations. This requirement must be maintained on an ongoing basis.
A maximum of two SROs for the NBFC sector will be recognised, subject to the applicants meeting prescribed criteria.
The guidelines under RBI's omnibus framework must be adhered to for application, recognition and functioning of the SRO.
The SRO may set up different verticals or divisions to cater to different categories of NBFCs, if necessary.
