FIDC to oversee NBFCs as ‘self-regulatory body’ – The Times of India

MUMBAI: RBI has recognised the Finance Industry Development Council (FIDC) as the official self-regulatory organisation (SRO) for NBFCs, aiming to tighten compliance, foster innovation, and boost sector development. The decision follows the June 19, 2024 press release inviting applications and the March 21 omnibus framework for SRO recognition. RBI received three applications, of which two were rejected for incompleteness.SROs are designed to complement statutory regulations, establish industry standards, draft codes of conduct, oversee compliance, settle disputes, and serve as intermediaries between members and the regulator. They must operate with independence, credibility, and sound governance, while keeping RBI informed through regular reporting and annual returns. To qualify, an SRO must be a Section 8 not-for-profit, with diversified shareholding, sufficient net worth, and either broad sector representation or a credible plan to achieve it. Its directors must meet fit-and-proper criteria, and boards are required to include at least one-third independent members, supported by adequate human and technical resources.The NBFC, despite accounting for nearly a third of lending activity has not had an SRO. However, segments of non-banks including microfinance institutions and digital lenders have their own SRO for some time.