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RBI releases draft framework for SROs, Check guidelines and send feedback to RBI


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The Reserve Bank of India (RBI) has unveiled a ‘Draft Omnibus Framework for Recognizing Self-Regulatory Organizations (SROs) for its Regulated Entities (REs)’ on its website, aiming to establish improved industry standards for self-regulation. The draft framework addresses the challenges posed by the rapid expansion of REs in terms of both numbers and operational scale. The proliferation of innovative technologies and increased customer outreach has made effective regulation by the RBI more challenging.

What is SRO?

A Self-Regulatory Organization or SRO is an organization that is formed to regulate certain professions or industries. They are usually non-governmental organizations, established with the aim of creating rules to promote order among businesses and organizations.

Key highlights of the draft omnibus framework include:

  1. Broad Parameters for SROs:
    The framework outlines broad parameters applicable to any SRO, encompassing objectives, responsibilities, eligibility criteria, governance standards, application processes, and other essential conditions for SRO recognition.
  2. Existing SROs Governance:
    Existing SROs recognized by the RBI will continue to be governed by their current terms and conditions, unless the framework is specifically extended to them.
  3. Overarching Objectives of SROs:
    SROs are expected to adhere to overarching objectives aimed at enhancing the professionalism, compliance, innovation, and ethical conduct within the sectors they represent.
  4. Emphasis on Self-Regulatory Principles:
    The RBI emphasizes the development and adherence to robust self-regulatory principles, practices, and conventions. Upholding the principles of good faith and avoiding conflicts of interest are essential aspects of SRO operations.
  5. Promotion of Compliance Culture:
    SROs should promote a culture of compliance among their members by advocating progressive practices and conventions. Special attention is to be given to supporting smaller entities within the sector.
  6. Code of Conduct:
    SROs are required to frame and implement a comprehensive code of conduct for their members, establishing minimum benchmarks and conventions for professional market conduct.
  7. Protection of Stakeholder Interests:
    SROs are expected to protect the interests of customers, depositors, participants, and other stakeholders in the ecosystem. They should collaborate with the RBI in ensuring compliance, sector development, stakeholder protection, fostering innovation, and detecting early warning signals.
  8. Transparency, Professionalism, and Independence:
    SROs are urged to operate with transparency, professionalism, and independence, fostering confidence in the integrity of the sector. Compliance with the highest standards of governance is considered a prerequisite for an effective SRO.

The final omnibus framework will be issued after considering stakeholder comments. The RBI will subsequently issue a separate notification inviting applications for SROs within the defined contours of the final framework.

How to submit comment/feedback?

Comments/ feedback from the stakeholders and members of the public on the above draft omnibus framework may be submitted by January 25, 2024, through e-mail or click on button below. Final omnibus framework shall be issued after considering the stakeholder comments. Reserve Bank shall issue separate notification inviting applications for SROs for a category/ class of its REs, within the broad contours of final omnibus framework.

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