MUMBAI – The Reserve Bank of India on Monday issued a framework for recognition of self-regulatory organisations in the financial markets space to help strengthen compliance culture and provide a consultative platform for policy making.
The proposed self-regulatory organisations (SROs) can play a vital role in developing industry standards and best practices and ensuring that members adhere to these, according to the central bank.
The self-regulation shall complement India’s legislative and regulatory framework, it added.
“In deliverance of this role, the SRO shall frame necessary best practices/standards/codes within the regulatory framework prescribed by the Reserve Bank of India for voluntary adoption by its members” but these will not be a substitute to the regulatory framework, the RBI said.
SROs will have to meet a set of overarching objectives for betterment of the sector they represent and address critical industry concerns. They will also establish minimum benchmarks and conventions for professional market conduct.
The SROs will be expected to ally with the RBI in ensuring better compliance with regulatory guidelines and for detection of early warning signals, among other things.
The central bank may revoke the recognition to an SRO, if it deems the functioning of the body to be detrimental to public interest or if the SRO is found to be conducting activities that are not in conformity with its objectives.
(Reporting by Swati Bhat; Editing by Mrigank Dhaniwala)
