Self-Regulatory Organization (SRO) for NBFC-MFIs – Criteria for Recognition

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Self-Regulatory Organization (SRO) for NBFC-MFIs – Criteria for Recognition

To be recognized as a Self-Regulatory Organization (SRO) for NBFC-Micro Finance Institutions (MFIs), an organization must meet several criteria:

  1. Membership:

The SRO should have at least one-third of registered NBFC-MFIs as its members at the time of seeking recognition.

  • Financial Independence:

It needs sufficient capital to operate independently, without relying heavily on member subscriptions.

  • Membership Criteria and Functions:

The SRO’s memorandum or bye-laws must clearly define the criteria for admitting members and outline its primary functions.

  • Governance:

The SRO’s governance structure, including the functioning of its Governing Body or Board of Directors, must be detailed in its memorandum or bye-laws.

  • Board Representation:

Both large and small NBFC-MFIs should have adequate representation on the Board.

  • Independent Directors:

At least one-third of the Board should comprise independent directors not associated with member institutions.

  • ‘Fit and Proper’ Criteria:

The Reserve Bank must consider the Board of Directors and the management as ‘Fit and Proper’.

  • Internal Controls:

The SRO must have robust internal control mechanisms.

  • Stakeholder Interests:

It should operate in the interest of all stakeholders and not just as an industry body.

  1. Code of Conduct:

The SRO must establish a Code of Conduct for its members.

  1. Grievance and Dispute Resolution:

It should have mechanisms for grievance redressal and dispute resolution, including a designated Grievance Redressal Nodal Officer.

  1. Surveillance and Enforcement:

The SRO should be capable of monitoring its members for compliance with the Code of Conduct and regulatory requirements through an Enforcement Committee.

  1. Developmental Role:

It should engage in training, awareness programs for members and Self-Help Groups, and conduct research and development for the MFI sector’s growth.

Obligations to the Reserve Bank:

  1. Compliance Officer:

Once recognized, the SRO must appoint a Compliance Officer who reports directly to the Reserve Bank and keeps it informed of sector developments.

  • Reporting:

The SRO must submit its Annual Report to the Reserve Bank.

  • Investigations:

It should investigate areas of concern as indicated by the Reserve Bank.        

  • Reporting Violations:

The SRO must inform the Reserve Bank about any member violations of RBI Act, directions, circulars, or guidelines.

  • Data Provision:

It should provide information, including data, periodically or as requested by the Reserve Bank.

  • Inspection:

The Reserve Bank may inspect the SRO’s books or arrange an audit if necessary.

 Introduction to RBI – NBFC Scale Based Regulation

Regulations applicable for NBFC-BL

Regulations applicable for NBFC-ML

Regulatory Instructions for NBFC-UL

Directions for NBFC – Micro Finance MFIs

Specific Directions for NBFC-Factors and NBFC-ICCs

Specific Directions for Infrastructure Debt Funds IDFs-NBFC

Scoring Methodology for Identification of NBFC as NBFC-UL

Regulatory Guidance on Implementation of Ind AS by NBFCsv

Norms on Restructuring of Advances by NBFCs

Early Recognition of Financial Distress

Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries

Guidelines on Liquidity Risk Management Framework

Disclosures in Financial Statements – Notes to Accounts of NBFCs

Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs

Guidelines for Credit Default Swaps – NBFCs as Users

Guidelines on Private Placement of NCDs by NBFCs

Guidelines for Entry of NBFCs into Insurance

Guidelines on Issue of Co-Branded Credit Cards

Guidelines on Distribution of Mutual Fund Products by NBFCs

Guidelines on Perpetual Debt Instruments

Guidelines on Liquidity Coverage Ratio (LCR)

Balance Sheet Disclosure Guidelines for NBFCs in Middle Layer and Above