RBI Issues Framework for SROs in Financial Markets | 20 Aug 2024

Source: LM

The Reserve Bank of India(RBI) issued a framework for recognition of self-regulatory organizations (SROs) in the financial markets to strengthen compliance culture and provide a consultative platform for policy making. 

• The proposed SROs can play a vital role in developing industry standards and best practices and ensuring member adherence.
• Under the new framework SROs must be not-for-profit companies (registered under Section 8 of the Companies Act, 2013) with a minimum net worth of Rs 10 crore, shareholding must be diversified, with no single entity holding 10% or more of the paid-up share capital.
• SROs regulate their respective industries or sectors, often in collaboration with government regulators.
  • The SRO will act as a bridge between its members and the regulator. It will ensure better compliance with regulatory guidelines, development of early warning signals, protection of stakeholder interests, and foster innovation.

Read more: Omnibus SRO Framework