The central bank on Thursday prescribed the broad objectives, functions, eligibility criteria and governance standards, which will be common for all SROs, irrespective of the sector.
“The SRO is expected to be an ally of the Reserve Bank in ensuring better compliance with the regulatory guidelines, development of the sector, protection of stakeholder interests, foster innovation and detection of early warning signals,” RBI said Thursday in its draft omnibus SRO framework for the entities it regulates.
SROs enhance the effectiveness of regulations by drawing upon the technical expertise of practitioners and also aid in framing and fine-tuning regulatory policies by providing inputs on technical & practical aspects, nuances and trade-offs involved, RBI said.
“Self-regulation shall complement the extant regulatory/ statutory framework for better compliance, in letter and spirit,’ it said.
Inviting comments on the draft framework, RBI said that guidelines contained in the framework are the minimum requirement and the recognised SROs will be encouraged to develop their best practices. RBI may prescribe sector-specific additional conditionalities in the future as well, at the time of calling for applications for recognising SROs.Existing SROs already recognized by the RBI will continue to be governed by the terms and conditions under which they were recognized.
