Press Releases

(457 kb)
Date : Nov 26, 2013
Self Regulatory Organization (SRO) for NBFC-MFI

The Reserve Bank of India had appointed a Sub-Committee of its Central Board of Directors, under the Chairmanship of Shri Y. H. Malegam, to study the issues and concerns in the microfinance sector in so far as it relates to entities regulated by the Reserve Bank. One of the suggestions of the Committee pertained to industry associations assuming greater responsibility in ensuring compliance by the Non-Banking Financial Companies that are engaged in microfinance (NBFC-MFIs), to the regulations. The broad framework of regulations, recommended by the Committee, including that of putting in place a self regulatory structure for the sector, was accepted by the Reserve Bank and a detailed regulatory framework for NBFC-MFIs microfinance, was put in place vide directions dated December 02, 2011. The directions also stated that separate guidelines will be issued on the role of industry associations in the overall monitoring of the microfinance sector.

To give effect to the recommendation of the Sub-Committee on formation of industry associations, to ensure effective monitoring of the functioning of NBFC-MFIs, their compliance with the regulations and code of conduct and in the best interest of the customers of the NBFC-MFIs, the Reserve Bank has decided to accord recognition to industry associations as SRO of NBFC-MFIs. The membership of NBFC-MFIs in the industry association/SRO will be seen by the trade, borrowers and lenders as a mark of confidence and removal from membership will be seen as having an adverse impact on the reputation of such removed NBFC-MFIs. While membership to the SRO is not mandatory, NBFC-MFIs are encouraged to voluntarily become members of at least one SRO.

The SRO holding recognition from the Reserve Bank will have to adhere to a set of functions and responsibilities, such as formulating and administering a Code of Conduct recognized by the Bank, having a grievance and dispute redressal mechanism for the clients of NBFC-MFIs, responsibility of ensuring borrower protection and education, monitoring compliance by NBFC-MFIs with the regulatory framework put in place by the Reserve Bank, surveillance of the microfinance sector,  training and awareness programmes for the members, Self Help Groups, etc and submission of its financials, including Annual Report, to the Reserve Bank. The minimum responsibilities of the SRO towards the microfinance sector and the Reserve Bank is given in Annex I. The same may be modified by the Reserve Bank from time to time to improve the efficiency of the sector.

Interested parties are required to apply to the Reserve Bank, seeking recognition as SRO and furnish all details as per Annex I, to the Principal Chief General Manager, Department of Non-Banking Supervision, Central Office, World Trade Centre, Cuffe Parade, Mumbai–400 005.

The recognition of the SRO by the Bank will be communicated by letter giving the detailed terms and conditions and other obligations associated with the recognition.

Ajit Prasad
Assistant General Manager

Press Release : 2013-2014/1066


2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
Archives
Server 214
Top