NBFCs RBI Recognises FIDC as Self-Regulatory Organisation

• Background: RBI announced the application to accept NBFCs with Self-Regulatory Organisers (SROs) under the Omnibus Framework ( March 21, 2024).
• Recognition: Finance Industry Development Council (FIDC) was chosen as SRO in the NBFC industry.

Role of SRO:

• Establish and create regulatory standards.
• Encourage integrity in the market and ethical behavior.
• Settle conflicts in the industry.

Governance & Eligibility:

• Representative structure using expertise of the members.
• Minimum net worth of 2 crore in one year of recognition.
• Diversified shareholding; none of them has 10% and above.
• A third of the board members including the chairperson should be independent.
• Most of the non-independent directors to represent fintechs that are not under the RBI.
• New offices in other countries are not possible; foreign fintechs may be members.
• Purpose: Empower self-governing, ethical and transparent NBFC ecosystem.