Reserve Bank of India (RBI) finalised the Omnibus Framework for recognising Self-Regulatory Organisations (SROs) for Regulated Entities (REs) | Current Affairs | Vision IAS
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ESC
  • Omnibus framework contains broad parameters viz., objectives, responsibilities, eligibility criteria, governance standards etc. which will be common for all SROs.

 

  • Objectives of SROs include promoting compliance culture, support to smaller entities, act as collective voice of members, collect sectoral information, and encourage R&D culture. 

 

  • Eligibility: An SRO shall be setup as a not-for-profit company registered under Section 8 of the Companies Act, 2013.
    • It should have adequate net worth, sufficiently diversified shareholding and must represent the sector

 

  • Characteristics: SRO shall have sufficient authority derived from membership agreements along with strong governance mechanisms. 
    • It shall develop standards for improving compliance culture and surveillance methods for sector monitoring

 

  • Responsibilities of SROs:
    • Towards members: Promote best business practices, establish minimum conduct benchmarks, disseminate sector specific information and dispute resolution/arbitration structure.
    • Towards Regulator: Ensuring regulatory compliance, promote sector development, foster innovation and detect early warning signals.

 

  • Governance framework:
    • Articles of Association (AoA)/ bye-laws shall provide for manner of functioning of Governing Body and specify the functions of SRO.
    • At least one-third of members in Board of Directors including Chairperson shall be independent.
    • Compliance with relevant Acts, regulations, guidelines, directions or circulars issued by RBI.
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