RBI Invites Applications To Establish Self-Regulatory Organisations For NBFC Sector
Date
6/20/2024 2:28:09 PM
(MENAFN- KNN India)
New Delhi, Jun 20 (KNN) The Reserve bank of India (RBI) has initiated a process to recognise Self-Regulatory Organisations (SROs) for the Non-Banking financial Company (NBFC) sector.
This move is part of the central bank's omnibus framework for recognising SROs for regulated entities.
In a circular issued on Wednesday, the RBI stated that applicant entities must meet the eligibility criteria and guidelines outlined in the omnibus framework, along with specific instructions provided by the regulator.
The primary focus of the SRO for the NBFC sector will be on Investment and Credit Companies (NBFC-ICCs), Housing Finance Companies (HFCs), and Factors (NBFC-Factors). However, the SRO may also include other categories of NBFCs as members.
To ensure fair representation, the RBI has mandated that the recognised SRO must have a diverse membership, including at least 10 per cent of the total number of NBFCs categorised as NBFC-ICC and NBFC-Factor in the Base Layer under the Scale Based Regulatory Framework.
Failure to achieve this membership threshold within two years of recognition could lead to the revocation of the SRO's recognition.
Furthermore, the applicant entity must achieve a minimum net worth of Rs 2 crore within one year after recognition as an SRO by the RBI or before commencing operations as an SRO, whichever is earlier.
The SRO will be required to maintain this net worth on an ongoing basis.
The RBI has stated that a maximum of two SROs for the NBFC sector will be recognised, subject to the applicants fulfilling the prescribed criteria to the satisfaction of the central bank.
(KNN Bureau)
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