Mumbai, Mar 22 (KNN) The Reserve Bank of India (RBI) has released a final omnibus framework for recognising self-regulatory organisations (SROs) for regulated entities.

This framework sets out a roadmap for SROs to promote best practices, ensure regulatory compliance, and drive innovation while safeguarding the interests of stakeholders.

The RBI's framework underscores the importance of SROs in promoting a culture of compliance among members while encouraging research and development within the sector. They should ensure the highest standards of compliance and self-governance while fostering innovation. Special attention is directed towards smaller entities in the sector to ensure their inclusion and adherence to regulatory standards.

While representing the industry, SROs must ensure equitable and transparent treatment for all members. They must develop uniform, reasonable, and non-discriminatory membership fee structures.

Recognising the importance of effective dispute resolution mechanisms, SROs are required to establish grievance redress, dispute resolution, and arbitration frameworks for members. These processes should be efficient, fair, and transparent, aligning with regulatory and statutory requirements.

The framework outlines the responsibilities of SROs towards regulators emphasising their roles as allies of the RBI in ensuring better compliance, sector development, stakeholder protection, innovation, and early warning signal detection. They must promptly inform the RBI of any member violations.

Governance standards are highlighted, with provisions for professional management and independent oversight, SROs must be professionally managed non-profit companies with diversified shareholding. At least one-third of the board, including the chairperson, should be independent without active association with the regulated entities.

The RBI reserves the right to audit SROs, inspect their books, and revoke recognition if their functioning is detrimental to public interest, stakeholders, or non-conformity with SRO objectives.

SRO membership should be voluntary, with minimum membership criteria prescribed by the RBI.

Failure to achieve specified membership within the RBI's timeline could result in revocation of recognition.

The new framework aims to strengthen the role of SROs in promoting compliance, innovation, and governance within regulated sectors while ensuring effective oversight by the RBI.

(KNN Bureau)