RBI invites application for recognition of self-regulatory organisations for NBFCs

Reserve Bank of India

The Reserve Bank of India (RBI) on June 19 invited applications for the recognition of Self-Regulatory Organisations (SROs) for NBFCs, under the omnibus framework issued in March.

“It has now been decided to invite applications for recognition of SROs for the NBFC sector under the aegis of the aforesaid omnibus framework,” the RBI said in a release.

Interested applicants seeking recognition as SROs can submit their application by September 30, the RBI said.

The central bank said SROs for the NBFC sector are primarily envisaged for NBFCs in the categories of investment and credit companies (NBFC-ICCs), housing finance companies (HFCs), and factors (NBFC-Factors). However, the SROs may also have other categories of NBFCs as its members.

The SROs should ensure fair representation to smaller NBFCs, and have at least 10 percent of the total number of NBFCs in the base layer as per the Scale Based Regulatory Framework, and categorised as NBFC-ICC and NBFC-Factor as its members, the RBI said in the release.

Further, the RBI said the recognition of SROs can be revoked if they fail to achieve membership within two years of the grant of recognition as SRO.

The criteria also includes that the entity applying for recognition as SRO should have a minimum net worth of Rs 2 crore two crore within a period of one year after being recognised as such by the RBI, or before commencement of operations as an SRO. “Thereafter, the SRO shall maintain this on an ongoing basis.”

The RBI said a maximum of two SROs for the NBFC sector will be recognised. This will be subject to the applicants fulfilling the prescribed criteria to the satisfaction of the Reserve Bank.