Reserve Bank of India (RBI) finalised the Omnibus Framework for recognising Self-Regulatory Organisations (SROs) for Regulated Entities (REs)

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Posted 28 Mar 2024

Updated 30 Mar 2024

2 min read

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.