(MENAFN- KNN India) New Delhi, Oct 6 (KNN) The Reserve Bank of India (RBI) has officially recognised the Finance Industry Development Council (FIDC) as the Self-Regulatory Organisation (SRO) for Non-Banking Financial Companies (NBFCs).

The move aims to strengthen compliance, promote innovation, and support the overall development of the NBFC sector.

Under this framework, FIDC will oversee NBFCs by establishing industry standards and codes of conduct, monitoring compliance, resolving disputes, and acting as an intermediary between members and the regulator, reported TOI.

The recognition marks a significant step in enhancing governance and accountability in a sector that contributes to nearly one-third of India's lending activity.

SROs are intended to complement statutory regulations while operating with independence, credibility, and sound governance.

They are required to maintain regular reporting and annual returns to the RBI and must be registered as a Section 8 not-for-profit entity with diversified shareholding, sufficient net worth, and a credible plan for broad sector representation.

Boards of SROs are mandated to include at least one-third independent members, supported by adequate human and technical resources.

The RBI's recognition of FIDC follows its June 19, 2024 call for applications and the March 21 omnibus framework for SRO recognition.

Out of three applications received, two were rejected for incompleteness. While certain segments of non-banks, including microfinance institutions and digital lenders, have had SROs for some time, the broader NBFC sector had not previously been covered.

This initiative is expected to enhance regulatory compliance, foster innovation, and strengthen sectoral development, positioning the NBFC sector for more robust and sustainable growth.

(KNN Bureau)

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