The Reserve Bank of India (RBI) has opened applications to recognise Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs) under its newly established Omnibus Framework. This follows the framework issued on 21st March, 2024, which details the objectives, responsibilities, eligibility criteria, governance standards and application process for SROs.
The membership criteria are as follows:
Eligible NBFCs: The SRO for the NBFC sector is primarily intended for NBFCs in the categories of 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 its members.
Membership composition: The recognised SRO should have a diverse membership including a good mix of NBFC-ICCs, HFCs and NBFC-Factors. To ensure fair representation of smaller NBFCs, the SRO must have at least 10 per cent of the total number of NBFCs in the Base Layer, as per the Scale-Based Regulatory Framework, categorised as NBFC-ICC and NBFC-Factor. Failure to meet this membership requirement within two years of recognition may result in revocation of the SRO status.
Net worth requirement: The SRO must achieve a minimum net worth of Rs 2 crore within one year of recognition or before starting operations, whichever is earlier. This net worth must be maintained continuously.
The RBI will recognise a maximum of two SROs for the NBFC sector, provided the applicants meet the required criteria. Interested applicants seeking recognition as an SRO may submit their application by 30th September, 2024.
